Author: Socra, Jinse Finance
On November 6, Trump won the US election, returning to the White House means the Trump 2.0 era is about to begin. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly set historical highs, challenging the $80,000 mark, and altcoins have welcomed a long-awaited rally.
Due to the strong momentum of the current crypto market rally, many investors are concerned whether the current crypto market is a bit overheated. Those who have already invested are also considering the market direction after Trump's victory, even making investment plans for when Trump officially takes office next year. In this regard, Jinse Finance has summarized the recent predictions and possible positive and negative events from various authoritative institutions.
I. Major Events Impacting the Crypto Market
Positive news:
1. Spot Bitcoin ETF inflows
On November 6, the total trading volume of the spot Bitcoin ETF exceeded $6 billion, with BlackRock's spot Bitcoin ETF trading volume exceeding $4.1 billion, setting a new historical record.
On November 7, BlackRock's Bitcoin ETF inflows reached $1.11692 billion, the largest inflow since its launch. The top four daily inflows are: $1.11692 billion on November 7; $872 million on October 30; $849 million on March 12; $788 million on March 5.
2. Rate Cut Cycle
On November 7, US Eastern Time, the Federal Reserve announced after the FOMC meeting that it would lower the target range for the federal funds rate from 4.75% to 5.0% to 4.5% to 4.75%, a reduction of 25 basis points (bp).
According to CME's 'Fed Watch', the probability of the Federal Reserve cutting interest rates by 25 basis points in December is 71%. The probability of maintaining the current rate in January next year is 16.6%, the cumulative probability of a 25 basis point cut is 53%, and the cumulative probability of a 50 basis point cut is 30.4%.
JPMorgan expects the Federal Reserve to cut rates quarterly after the December policy meeting until the federal funds rate reaches 3.5%.
3. Favorable policies and regulatory easing
On November 6, the Republican Party gained control after securing key Senate seats in Ohio and West Virginia, thus obtaining a majority in the US Senate. This may mean that Congress will be more supportive of cryptocurrencies, as the Republican-controlled Senate is expected to prepare clearer regulations for cryptocurrencies.
CoinShares: The biggest benefit of Trump for cryptocurrencies will be through the Bitcoin bill. Meanwhile, the Senator from Wyoming proposed the (2024 Bitcoin Bill) aimed at establishing a strategic Bitcoin reserve, intending to purchase 1 million Bitcoins within five years.
Trump's team is considering listing Robinhood's chief legal and compliance officer Dan Gallagher as a candidate for the SEC chairman.
US SEC crypto-friendly commissioner Hester Peirce is seen as a potential successor for the next chairman.
Ethereum technical expert Vinay Gupta plans to promote crypto policies to Trump's transition team.
Bernstein: After Trump's inauguration, the US SEC and Senate Banking Committee are expected to adopt a friendly stance toward cryptocurrencies. It is anticipated that crypto assets will be re-rated, as it remains unclear whether these assets qualify as securities.
Additionally, the stablecoin and market structure bills may make faster progress, which would be beneficial for stablecoin issuers like Circle and Paxos, as well as cryptocurrency exchanges and brokers/dealers in the US.
Coinbase Chief Legal Officer: Hope the SEC stops suing cryptocurrencies and starts making rules.
The Chief Investment Officer of Bitwise Asset Management believes that the entire crypto space has been like moving with hands and feet bound for years, but that period should come to an end now. Investors are starting to build positions in crypto assets for the coming years.
Paradigm Policy Research Director: Former Biden White House staffers indicate that Democrats will no longer fight to the end over cryptocurrencies.
CCTV reports Bitcoin price hits new highs and states that Trump has promised to establish a Bitcoin strategic reserve.
4. Financial Environment
After Trump's victory, Wall Street institutions like JPMorgan and Goldman Sachs are seeking potential opportunities for crypto companies to go public in the US, such as Kraken, Fireblocks, and Chainalysis.
Matrixport's weekly report shows that the Bitcoin adoption rate is close to the critical 8% threshold, with approximately 7.51% of the global population (617 million people) using cryptocurrencies, nearing an 8% adoption rate. Reaching this threshold could mark a turning point for Bitcoin's mainstream application.
Bearish:
Powell: As we approach neutral interest rates, it may be necessary to slow the pace of rate cuts.
Barclays expects the Federal Reserve to cut rates only twice by 2025, each by 25 basis points, down from a previous forecast of three cuts. The Bank of England is expected to keep rates unchanged at the December meeting, whereas it was previously predicted to cut rates.
Orion Portfolio Solutions analyst: Since the first rate cut, long-term rates have been on a sharply rising trajectory and began to decline after today’s announcement of a rate cut. Against the backdrop of a strong US economy, the future path for the Federal Reserve may be more complicated than steady rate cuts.
II. Predictions from Various Parties
Bullish:
Galaxy's research director: Bitcoin has repeatedly set historical highs this week, and from a fundamental perspective, the market does not appear to be overheated.
Galaxy CEO: Trump's victory may bring 'hundreds of billions of dollars' to the crypto ecosystem.
Nansen analysts have expressed similar views. 'Bitcoin breaking historical highs under high trading volume is a clear signal of sustained positive momentum post-election.'
JPMorgan: Bitcoin will continue to benefit from Trump's victory for about the next eight weeks, with effects similar to those seen in 2016. Trump has repeatedly stated that he will support the digital asset industry and raise tariffs, both policies that could ultimately benefit Bitcoin.
QCP Capital: BTC has experienced three election cycles, all showing rebound trends, and the price has never fallen back to previous levels. It is expected that this bull market momentum will remain strong in 2025.
Standard Chartered: After Trump's victory, Bitcoin will reach $125,000 by the end of this year and will reach $200,000 by the end of 2025. In terms of regulation, it is expected that Trump will overturn Biden's veto on SAB 121.
Coinbase CEO: From a policy perspective, cryptocurrencies will continue to exist until the industry is established in the US.
Bitwise Chief Investment Officer: We are entering a golden age for cryptocurrencies, and we will see a strong bull market in the coming years.
Copper's research director: By January 20, 2025, when Trump is inaugurated, Bitcoin's price is likely to reach $100,000. During Trump's first term from 2016 to 2020, Bitcoin witnessed two historical peak cycles. While these increases occurred against a backdrop of a weakening dollar, the current environment is different with a strengthening dollar. However, given that the Bitcoin spot ETF currently holds about 1.1 million Bitcoins, momentum may remain positive in the coming months.
CNBC: Bitcoin prices could reach $100,000 before the presidential inauguration.
Bernstein analyst: After Trump's victory, the headwinds for crypto regulation have turned into tailwinds. A new 'crypto-friendly' SEC chairman and Senate Banking Committee are expected to accelerate regulatory transparency in the industry. The crypto sector is seeking new rules to define digital assets as something other than securities, the applicability of broker-dealer laws to crypto exchanges and DeFi, speeding up the approval of investment products like ETFs, and allowing banks to own and custody cryptocurrencies.
MakerDAO founder: Trump's victory will drive a real and sustained revival of DeFi, with the likelihood of user numbers increasing tenfold, as DeFi benefits the most from reduced regulatory uncertainty in the US compared to other areas of the crypto space.
Bearish:
Orion Portfolio Solutions analyst: The future path of rate cuts may be more complex. The FOMC announced a rate cut of 25 basis points in November as expected, indicating that their aggressiveness has decreased compared to the rate cut in September. Notably, since the first rate cut, long-term rates have been on a sharply rising trajectory and began to decline after today’s announcement of a rate cut. Against the backdrop of a strong US economy, the future path for the Federal Reserve may be more complicated than steady rate cuts.
Canadian Imperial Bank of Commerce: Businesses and markets have reason to be cautious about Trump 2.0. Protectionism could be an adverse factor for economic growth in the US and globally. Implementing fiscal stimulus in an oversupplied US economy will again trigger inflation risks and rising yields, further increasing the US fiscal deficit.
Summary
According to the mainstream views of various institutions at present, the vast majority are optimistic about the future market of cryptocurrencies and believe a new bull market may be on the way. In contrast, negative events and bearish statements have become the 'minority', with bearish logic mainly stemming from the Federal Reserve's slower rate cuts and the economic crisis that inflation may bring, which could impact the crypto market. However, considering the current overall market situation, it is clear that traders choosing to sell or short at this time may be suspected of going against the trend.
