On November 5th, all eyes were on the USA awaiting the outcome of the presidential elections which pitted #donaldtrump against Kamala Harris.
While speculation on Polymarket showed a rapprochement between the two candidates, the verdict that emerged later showed a large victory for Donald Trump.
The spectacular return of the former President of the United States brings a great breath of hope for the wider adoption of cryptocurrencies. In fact, the crypto industry has encountered several obstacles during its development in recent years, particularly in the United States. These setbacks with the SEC have generated a climate of pessimism about the future of this financial revolution.
Many investors, particularly major financial intuitions, have been reluctant until now because of a legislative framework that seemed unfavourable to the development of the sector.
An enabling environment that recognizes and embraces blockchain innovations is needed to enable global adoption and greater stability. This was the first time in US political history that a pro-crypto man won the presidential election.
Why is Donald Trump's election positive for the markets?
The day after the US presidential elections was marked by a bullish market reaction. This configuration is based on a feeling of optimism among investors who now see major potential confirmed in the crypto industry.
Let's understand the dynamics by examining these 3 major axes which play a fundamental role in the evolution of the cryptocurrency market.
1️⃣ The war in Ukraine and Israel - Iran
Since Russia's invasion of Ukraine in February 2022, the global economy has been severely shaken. This has affected the economic and monetary policies of all countries in the world.
In the Middle East, the dissensions between Israel and its neighbors have accentuated the economic difficulties that were faced, particularly with the increase in the cost of energy, which, without forgetting it, is correlated with the performance of the markets. Stability in these different areas is essential for better market performance.
During his election campaign, the new head of the White House had clearly shown a pragmatic approach that could put an end to these conflicts, which constitutes a positive signal for the markets.
2️⃣ The Fed's monetary policy
To combat inflation, which had become almost uncontrollable, the Fed and the ECB adopted a restrictive monetary policy.
These measures are all the more persistent since geopolitical circumstances do not allow for a return to normal of economic indicators. Each time the situation begins to improve, international tensions come to disrupt the situation. Thus, future decisions of the White House will be able to ease tensions and give more optimistic perspectives on the stability of the global economy.
Since the beginning of the second half of 2024, the Fed has been on a path of lowering key rates. If we can control the differences between these powers, a climate of political stability could help maintain this momentum.
3️⃣ The power of the SEC
Many projects in the cryptocurrency sector have been nipped in the bud by allegations from the Security and Exchange Commission (SEC) under its chairman Gary Gensler. The latter has been considered one of the toughest figures against the cryptocurrency sector since his arrival in April 2021.
“While we today approve the listing and trading of certain bitcoin-based investment products, we have neither endorsed nor supported bitcoin.”
This was his statement in a press release.
According to him, his seat at the head of the SEC does not provide hope for the development of the cryptocurrency industry. These various setbacks with crypto projects, particularly with Ripple Labs but also some large exchanges, including Binance, Coinbase and others, testify to his impertinence in promoting the development of these innovations.
At the Bitcoin conference in Nashville, President Trump said, quote:
I will fire Gary Gensler and appoint a new SEC Chairman...who believes America should build the future, not block it.
Even though the SEC is an independent organization, it is quite possible that when President Trump takes office, all the chances are in place to replace Gary Gensler with someone more inclined to promote blockchain technology innovation.
The world of cryptocurrencies is a revolution that is experiencing the fastest adoption across the world. However, its promotion remains hampered by an unstable geopolitical and economic climate as well as stifling legislation.
The arrival in power of leaders who are in favour of this innovation gives hope for the development and expansion of the sector.
