Market conditions aspects
Price increase: During his campaign, Trump promised to support cryptocurrencies, such as making the United States the 'cryptocurrency capital' and designating Bitcoin as a strategic reserve asset for the U.S. These statements ignited speculative enthusiasm in the market. As a result, the prices of cryptocurrencies like Bitcoin surged significantly, with Bitcoin nearing $100,000 by the end of 2024, achieving an annual increase of over 100%; prices of other cryptocurrencies like Ethereum also rose significantly.
Increase in capital inflow: According to data compiled by Bloomberg, in November after Trump's victory, the monthly net inflow of funds into Bitcoin and Ethereum ETFs reached record highs of $6.5 billion and $1.1 billion, respectively. A large influx of funds into the cryptocurrency market has significantly boosted the overall market capitalization, which has increased by about $1.2 trillion since Trump's election, surpassing the $3.2 trillion mark.
Increased market activity: Trading activities in cryptocurrencies have become more frequent. Not only are mainstream cryptocurrencies like Bitcoin and Ethereum actively traded, but other cryptocurrencies like Ripple have also seen increased trading volume and rising prices due to the overall market heat. For instance, Ripple's market capitalization surged by over $100 billion after Trump's victory, becoming the third-largest cryptocurrency.
Regulatory policy aspects
Regulatory stance turns lenient: Trump plans to nominate several pro-cryptocurrency officials to the financial regulatory agencies and has promised to fire Gary Gensler, the chairman of the U.S. Securities and Exchange Commission (SEC), who has a strict regulatory attitude toward cryptocurrencies. Lawyers viewed as successors to Gensler have criticized his lawsuits, with potential candidates suggesting that the SEC should pause most cryptocurrency lawsuits to allow businesses to operate without the burden of litigation.
Promoting the implementation of regulatory legislation: The U.S. Congress is considering two key pieces of legislation related to cryptocurrencies, namely the (21st Century Financial Innovation and Technology Act) and the (Payment Stablecoin Clarity Act). The former aims to establish a legal framework for digital assets, while the latter aims to establish a regulatory system and provide licenses to stablecoin issuers. Coinbase's senior policy director expects that after Trump takes office, the U.S. Congress will quickly pass regulatory legislation concerning the cryptocurrency industry.
Industry development aspects
Increased industry confidence: Trump's supportive stance on cryptocurrencies and a series of policy commitments have greatly boosted the confidence of cryptocurrency industry practitioners and investors, aiding long-term development planning and project implementation, and attracting more talent and resources into the field.
Accelerated industry innovation: With the improvement of the regulatory environment and the abundance of market funds, the pace of innovation in the cryptocurrency industry may accelerate, including new cryptocurrency projects, decentralized finance (DeFi) applications, and the expansion of blockchain technology into other fields.
The U.S. becomes an industry hub: Trump aims to make the U.S. the 'global cryptocurrency capital,' which may attract global cryptocurrency-related enterprises and talent to converge in the U.S., making the country's position in the global cryptocurrency market more significant and playing a key role in liquidity and benchmark pricing of cryptocurrencies.
