Author: Socra, Golden Finance
On November 6, Trump's victory in the U.S. election and return to the White House signifies the imminent start of the Trump 2.0 era. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly set historical highs and approached the $80,000 mark, while altcoins have also welcomed a long-awaited bullish trend.
Due to the strong momentum of this cryptocurrency rally, many investors are concerned about whether the current crypto market is overheated. Investors who have already entered the market are also considering the market direction after Trump's victory, even planning investments for after Trump's official inauguration next year. In this regard, Golden Finance has summarized the recent predictions and potential bullish and bearish events from various authoritative institutions.
1. Major events impacting the crypto market
Bullish:
1. Inflows into the spot Bitcoin ETF
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, hitting a historical high.
On November 7, BlackRock's Bitcoin ETF saw an inflow of $1.11692 billion, the largest inflow since its launch. The daily inflow rankings are as follows: November 7 inflow $1.11692 billion; October 30 inflow $872 million; March 12 inflow $849 million; March 5 inflow $788 million.
2. Rate cutting cycle
On November 7, 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 a 25 basis point rate cut by the Federal Reserve in December is 71%. The probability of maintaining the current rate in January next year is 16.6%, while the cumulative probability of a 25 basis point rate cut is 53%, and a cumulative 50 basis point rate 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. Positive Policy, Regulatory Relaxation
On November 6, the Republican Party gained control after securing key Senate seats in Ohio and West Virginia, meaning the Republicans now have a majority control of the U.S. Senate. This could mean that the U.S. Congress will be more supportive of cryptocurrencies, as the Republican-controlled Senate is expected to prepare clearer cryptocurrency regulations.
CoinShares: The biggest benefit of Trump for cryptocurrencies will be through the Bitcoin bill. At the same time, a senator from Wyoming proposed the (2024 Bitcoin bill) aimed at establishing a strategic Bitcoin reserve, purchasing 1 million Bitcoins within five years.
Trump's team is considering naming Robinhood's Chief Legal and Compliance Officer Dan Gallagher as a candidate for SEC Chairman.
SEC crypto-friendly commissioner Hester Peirce is considered a potential successor for the next chair.
Ethereum technical expert Vinay Gupta plans to promote crypto policies to Trump's transition team.
Bernstein: After Trump's inauguration, the SEC and Senate Banking Committee are expected to take a friendly stance towards cryptocurrencies. It is expected that crypto assets will be re-rated, as it remains unclear whether these assets meet the qualifications of securities.
In addition, stablecoin and market structure legislation may make faster progress, which is favorable for stablecoin issuers such as Circle and Paxos, as well as crypto exchanges and brokers/dealers in the U.S.
Coinbase Chief Legal Officer: Hopes the SEC will stop suing cryptocurrencies and start formulating rules.
Bitwise Asset Management Investment Director believes that the cryptocurrency market, which has been constrained for years, should now come to a close. Investors have begun to build positions in crypto assets for the coming years.
Paradigm Policy Research Director: A former Biden White House staffer stated that Democrats will no longer fight cryptocurrencies to the end.
CCTV reports that Bitcoin prices have reached new highs and that Trump once promised to establish a strategic Bitcoin reserve.
4. Financial Environment
After Trump's victory, Wall Street institutions such as JPMorgan and Goldman Sachs are seeking potential opportunities for crypto companies' IPOs in the U.S. stock market, including companies like Kraken, Fireblocks, and Chainalysis.
Matrixport's weekly report shows that Bitcoin's adoption rate is approaching the critical 8% threshold, with about 7.51% of the global population (617 million people) using cryptocurrencies, close to the 8% adoption rate. Reaching this threshold could mark a turning point for Bitcoin towards mainstream application.
Bearish:
Powell: As we approach a neutral interest rate, it may be necessary to slow the pace of rate cuts.
Barclays expects the Federal Reserve to cut rates only twice in 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, contrary to earlier predictions of a rate cut.
Orion Portfolio Solutions Analyst: Since the first rate cut, long-term interest rates have been on a sharply rising trajectory and began to decline after the rate cut was announced today. Against the backdrop of a strong U.S. economy, the path ahead for the Federal Reserve may be more complex than a steady rate cut.
2. Predictions from various parties
Bullish:
Galaxy Research Director: Bitcoin has set multiple historical highs this week, and from a fundamental perspective, the market does not appear to be overheating.
Galaxy CEO: Trump's victory could bring 'hundreds of billions of dollars' to the crypto ecosystem.
Nansen analysts expressed similar views: 'Bitcoin breaking historical highs on high trading volumes is a clear signal of sustained positive momentum after the election.'
JPMorgan: Bitcoin will continue to benefit from Trump's victory for about the next eight weeks, producing a response similar to 2016. Trump has repeatedly stated that he will support the digital asset industry and increase tariffs, both of which 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 in 2025, this bullish momentum will remain strong.
Standard Chartered: Bitcoin is expected to reach $125,000 by the end of this year and $200,000 by the end of 2025 after Trump's victory. 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 U.S.
Bitwise Chief Investment Officer: We are entering the golden age of cryptocurrencies, and we will witness a strong bull market in the coming years.
Copper Research Director: By January 20, 2025, when Trump takes office as president, the price of Bitcoin is likely to reach $100,000. During Trump's presidency from 2016 to 2020, Bitcoin witnessed two historical peak cycles. Although these increases occurred against the backdrop of a weakening dollar, which is different from the current strong dollar environment. However, given that the Bitcoin spot ETF currently holds about 1.1 million Bitcoins, momentum in the coming months may remain positive.
CNBC: Bitcoin prices could reach $100,000 before the presidential inauguration.
Bernstein analysts: 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 for the industry. The crypto industry is seeking new rules to define digital assets as assets other than securities, clarify the applicability of broker-dealer laws to crypto exchanges and DeFi, expedite the approval of investment products such as ETFs, and allow banks to own and custody cryptocurrencies.
MakerDAO Founder: Trump's victory will drive a real revival of DeFi, with the likelihood of user numbers increasing tenfold greatly improving, as DeFi benefits the most from the reduction of regulatory uncertainty in the U.S. compared to other aspects of the crypto space.
Bearish:
Orion Portfolio Solutions Analyst: The future path of rate cuts may be more complex. The FOMC announced a 25 basis point rate cut in November, indicating a reduction in the aggressiveness compared to the September rate cut. Notably, since the first rate cut, long-term interest rates have been on a sharply rising trajectory and began to decline after the announcement today. In the context of a strong U.S. economy, the path ahead for the Federal Reserve may be more complex than steady rate cuts.
Canadian Imperial Bank of Commerce: Businesses and markets have reasons to be cautious about Trump 2.0. Protectionism could become a disadvantage for U.S. and global economic growth. Implementing fiscal stimulus on an oversupplied U.S. economy could reignite inflation risks and rising yields, further increasing the U.S. fiscal deficit.
Summary
According to the mainstream views of various institutions, the vast majority are optimistic about the future market of cryptocurrencies, believing that a new bull market may be on the way. In contrast, bearish events and pessimistic statements have become the 'minority', with bearish logic mainly stemming from the Federal Reserve's slowing rate cuts and potential economic crises due to inflation, which may affect the crypto market. However, given the overall market conditions at this stage, it is clear that choosing to sell or short at this time could be seen as going against the trend.
