Article reprinted from: Odaily Planet Daily
Original | Odaily Planet Daily (@OdailyChina)
Author | Fu Ruhe (@vincent 31515173)
With Trump's unexpected victory in the U.S. elections, the global cryptocurrency market is filled with expectations for the future policy environment. The market generally believes that the Trump administration will bring new opportunities for the crypto industry, potentially reducing regulatory pressure and providing a more open policy space. The Republican Party's consistent pro-business stance, combined with Trump's team's free-market thinking, has led market investors and industry leaders to optimistically predict a gradual shift in the U.S. regulatory attitude towards crypto, injecting new momentum into the industry. Under such expectations, Bitcoin's price rapidly surged to $76,400, setting a new historical high.
So how will Trump's election affect the cryptocurrency market? Next, Odaily Planet Daily will analyze from multiple perspectives such as regulatory winds, the future of Bitcoin, institutional investor expectations, market volatility, and the promotion of DeFi, and gather insights from various professionals.
Changes in the regulatory environment and new policy directions
In terms of policy, Trump's victory has reignited hope in the cryptocurrency market.
A report led by the Bernstein analysis team, headed by Gautam Chhugani, pointed out that the Trump administration's inauguration will help accelerate the turnover of top personnel at the U.S. Securities and Exchange Commission (SEC), potentially introducing a "crypto-friendly" new chairman. The Republican Party's support for decentralized finance (DeFi) and stablecoins may drive the passage of regulations such as the Digital Commodities Consumer Protection Act. The potential reforms in these policies will help legalize the crypto market and provide clearer policy guidance for the industry.
Coinbase Chief Legal Officer Paul Grewal expects that under the leadership of the new chairman appointed by Trump, the number of SEC crypto cases will undergo a "significant change," and believes that the new government will reassess all existing crypto cases brought by Gary Gensler, distinguishing which cases are clearly scams and frauds and which are not.
Coinbase CEO Brian Armstrong expressed optimism about this prospect, believing that a Republican-controlled Congress is "the most supportive of cryptocurrencies in history," and pointed out that this is a significant benefit for the industry's compliance and security. The new government's policy reforms will not only inject confidence into the market but also accelerate the development of stablecoin issuers like Circle and Paxos, speeding up their legalization process in the U.S.
Additionally, informed sources revealed that the Financial Innovation and Technology Act (FIT21), which was passed by the House earlier this year, may be jeopardized by Trump's victory. FIT21 aims to create a federal framework for cryptocurrency regulation and delineate the jurisdictional boundaries between the CFTC and SEC. However, as the cryptocurrency lobbying group's support shifts to more favorable legislation, the advancement of FIT21 may be shelved. The source pointed out that with the Republican Party controlling the White House, Senate, and possibly the House, supporting a more favorable alternative bill has become a reasonable choice. Thus, it can be seen that the new regulatory environment may become more lenient, providing a good development space for the market.
Bitcoin reserves and market prospects
The positive impact of Trump's election was quickly reflected in the price of Bitcoin. During the election vote counting, Bitcoin briefly broke through $75,000, setting a new historical high.
Bernstein predicts that the price of Bitcoin may further rise to $90,000 in the future, with a possible reach of $200,000 by 2025. This expectation is widely recognized by market analysts, especially for institutional investors, as Bitcoin's value as "digital gold" is increasingly emphasized.
Sun Yuchen pointed out that Trump's election may bring a "180-degree turnaround" for the Web3 industry, believing that Bitcoin's market performance has not fully reflected the profound impact of this policy change. Institutions' allocation to Bitcoin will be significantly enhanced, making it one of the mainstream financial assets, and this trend may further accelerate in the coming years.
Market volatility and trading opportunities
Analysts hold a positive view on market volatility.
Rong Ren Goh, portfolio manager at Hanya Investment in Singapore, believes that Trump's victory will bring short-term market volatility, which presents new opportunities for traders. These fluctuations mainly stem from the market's changing expectations regarding whether Trump will fulfill his crypto-friendly commitments. Over the past four years, the crypto market has faced numerous challenges due to regulatory pressure, and external investors' confidence in the crypto industry has gradually weakened. As the policy inclination becomes clearer, market volatility may drive investors to reassess their investment strategies in the crypto market, leading to new trading opportunities.
Institutional investors' attitudes and market inflows
As Trump's policy turns more favorable towards the crypto market, institutional investors' interest in the market is also increasing.
CoinShares research director James Butterfill stated that the policy shift under the Trump administration will bring a new wave of capital inflows to digital assets like Bitcoin, especially among institutional investors. Although the crypto market has attracted around $29 billion in inflows this year, he believes there is still significant potential for growth. With an improving regulatory environment and policy support, interest from institutional investors is expected to further rise. Market participants generally anticipate that as the crypto market becomes legalized, digital assets will be more widely accepted and further integrated into the traditional financial system in the coming years.
Bitfinex analysts expect that after Trump's election as president, the crypto market will welcome a "new wave of hope." As the industry anticipates a less hostile attitude from federal agencies towards cryptocurrencies, this trend is expected to promote more capital inflows into the Web3 sector. Analysts stated, "We expect a large amount of capital to be released for the crypto space in the short term."
The rise of the DeFi sector and market vitality
Trump's victory may also promote the native sectors of the crypto industry, particularly the rise of DeFi. The reason is that before the election, Trump's family launched a DeFi project called WIFI, which is currently in pre-sale, indicating their emphasis on the crypto native sector. Although Trump's victory did not improve the pre-sale situation of this project, it highlights their focus on the DeFi sector.
Rune Christensen, founder of Sky (formerly MakerDAO), stated on social media that Trump's victory will drive a "true sustainable revival" of DeFi, significantly increasing the likelihood of a tenfold growth in the number of users in the DeFi space. Christensen pointed out that DeFi is more able to benefit from the reduction of regulatory uncertainty in the U.S. compared to other areas of the crypto industry because its decentralized nature aligns more with the free-market principles supported by the Republican Party.
