The 2024 U.S. presidential election is undoubtedly the most talked-about election in recent years. Despite a tense pre-election period, Trump won the presidency by a landslide, and the Republican Party secured a majority in both the House and Senate. This result marks the beginning of a new political cycle in the U.S., with the cryptocurrency market being a direct beneficiary of this change.
Why do we say the 12 months after the election are the 'golden period' for the crypto market? Historical data tells us that the 12 months following the U.S. election are often a key window for strong growth in crypto assets, especially altcoins, which have repeatedly outperformed the market. Given the current policy environment, this time, the opportunity may be even clearer.
The crypto industry is ushering in a 'policy turning point.'
This election has introduced a 'crypto agenda' for the first time, and Trump and his team are open to cryptocurrencies. Several important policy changes after the election have injected a boost into the market:
1. Major changes in SEC policies
Under the leadership of the Biden administration, the SEC has implemented aggressive regulations on cryptocurrencies, with over 2,700 enforcement actions during Chairman Gary Gensler's tenure making the entire industry struggle. However, Trump has clearly stated that he will adjust the SEC leadership, and last week, Gensler announced he would resign in January 2025. It is reported that most of the successors are crypto-friendly, which means that the previous practice of 'managing through enforcement' will be replaced, and the industry may welcome a more transparent guidance framework.
2. Congress is more supportive of cryptocurrencies
With the Republican Party fully controlling Congress, nearly two-thirds of the lawmakers are seen as crypto-friendly. It is expected that the passage rate of crypto-related bills will significantly increase in the coming year, which will clear the barriers for institutional capital entering the crypto market and provide more policy support for innovative projects.
3. The U.S. may establish a 'strategic Bitcoin reserve'
During Trump's campaign, he proposed establishing a strategic Bitcoin reserve and stopping the sale of government-held bitcoins. This plan is currently being rapidly advanced, and the market is beginning to speculate whether the U.S. government will become a net buyer of Bitcoin. Such significant purchasing power could not only drive up Bitcoin prices but might also prompt other countries globally to follow suit.
4. Policy support for DeFi
The decentralized lending project World Liberty Financial (WLF), supported by Trump, has raised over $50 million and plans to scale up to $300 million. This DeFi project backed by a future U.S. president will have a profound impact on the industry and greatly encourage DeFi developers and innovators' confidence.
History shows: The 12 months after the election are the golden period for the crypto bull market.
Data tells us that in the 12 months following the U.S. presidential election, crypto assets often perform astonishingly well:
1. Strong price trends: Regardless of which party wins, crypto assets typically perform exceptionally well in the 12 months following the election. This trend stems from the market confidence brought about by the election results, and it also coincides with Bitcoin's halving cycle.
2. Altcoins have significant advantages: In the 12 months following the last two elections, altcoins (like ETH) saw increases about three times that of Bitcoin. For instance, after the 2020 election, Ethereum rose by 370%, while Bitcoin only increased by 120%. As of 30 days after the 2024 election, Bitcoin rose by 46% and Ethereum by 58%, indicating signs of an altcoin season.
Why is altcoin season worth looking forward to?
The emergence of 'altcoin season' is often related to a shift in risk appetite and changes in market structure. The following points deserve attention:
1. Market sentiment shifts towards risk appetite
The optimistic sentiment and favorable policies after the election have attracted more retail investors. Retail funds tend to prefer less liquid altcoins, which often leads to altcoins outperforming mainstream coins in the short term.
2. Guidance from historical cycles
From 2017 to 2021, altcoin seasons usually overlapped with the mid to late stages of bull markets and outperformed Bitcoin. For example:
The 2017 altcoin season, represented by ETH, saw an increase of up to 2700%;
In the 2021 altcoin season, tokens like SOL and MATIC saw increases of over 2000%.
History may repeat itself in 2024, as we are at the beginning of a new 'altcoin season.'
3. High return potential of small coins
Currently, the market shows strong interest in high-risk small and mid-cap tokens. Some small coins that have not yet attracted mainstream capital may explode during the 'altcoin season,' bringing tenfold or even hundredfold returns.
Future layout: Don’t miss the opportunities in altcoins.
In the current market environment, how to seize the opportunity of 'altcoin season'? Here are a few suggestions:
1. Focus on tokens related to policy dividends:
Such as tokens related to strategic Bitcoin reserves (BTC, ETH, etc.).
Decentralized finance (DeFi) tokens, such as AAVE and COMP.
2. Prefer small and mid-cap tokens:
Mainly tokens with a market capitalization of under $1 billion, especially small coins with innovative technology and community support.
3. Build positions in batches to control risk:
Although altcoins can yield high returns, they are highly volatile. It is recommended to build positions in batches to avoid heavy investments at once.