The 2024 U.S. presidential election is undoubtedly the most talked-about election in recent years. Despite a tightly contested pre-election atmosphere, Trump won the presidency by a landslide, and the Republican Party also secured a majority in both houses. This result marks the beginning of a new political cycle in the U.S., with the cryptocurrency market becoming a direct beneficiary of this change.
Why is the 12 months after the election considered 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 increases in crypto assets, especially altcoins, which have repeatedly outperformed the market. Combined with the current policy environment, this time, the opportunity may be even clearer.
The crypto industry is welcoming a 'policy inflection point'
This election is the first to introduce a 'crypto agenda,' and Trump and his team have an open attitude toward cryptocurrencies. Several important policy changes after the election have injected a strong boost into the market:
1. Major changes in SEC policies
Under the leadership of the Biden administration, the SEC has taken aggressive regulatory action against 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 the previous practice of 'regulating through enforcement' will be replaced, and the industry may welcome a more transparent guiding framework.
2. Congress is more supportive of cryptocurrencies
With the Republican Party fully controlling Congress, nearly two-thirds of the legislators are considered crypto-friendly. It is expected that the passage rate of crypto-related bills will significantly increase in the coming year, which will clear the obstacles for institutional capital to enter 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 halting the sale of government-held Bitcoin. This plan is currently being expedited, and the market is beginning to speculate whether the U.S. government will become a net buyer of Bitcoin. Such enormous purchasing power could not only push up Bitcoin prices but may also trigger similar actions from other countries around the world.
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 supported by a future U.S. president will have a profound impact on the industry, greatly encouraging the confidence of DeFi developers and innovators.
History proves: The 12 months after the election is a golden period for the crypto bull market.
Data shows 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 always perform exceptionally well in the 12 months following the election. This trend stems from the market confidence brought about by the election results and also overlaps with the Bitcoin halving cycle.
2. Altcoins show significant advantages: In the 12 months after the last two elections, the gains of altcoins (like ETH) were about three times that of Bitcoin. For example, after the 2020 election, Ethereum gained 370%, while Bitcoin only increased by 120%. As of 30 days after the 2024 election, Bitcoin rose by 46%, Ethereum by 58%, and signs of altcoin season have already emerged.
Why is altcoin season worth looking forward to?
'Altcoin season' often correlates with a shift in risk appetite and changes in market structure. The following points are worth noting:
1. Market sentiment shifts to risk appetite
The optimistic sentiment and favorable policies after the election 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 season typically overlapped with the later stages of a bull market, outperforming Bitcoin. For example:
The 2017 altcoin season, represented by ETH, saw a staggering increase of 2700%;
In the 2021 altcoin season, tokens like SOL and MATIC saw increases of over 2000%.
History may repeat itself in 2024; we are at the beginning of a new round of 'altcoin season.'
3. High return potential of small tokens
Currently, the market shows strong interest in high-risk small and medium-cap tokens. Some small tokens that have not yet attracted mainstream capital may explode during 'altcoin season,' bringing tenfold or even hundredfold returns.
Future layout: The opportunity of altcoins should not be missed.
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:
For instance, tokens related to strategic Bitcoin reserves (e.g., BTC, ETH).
Decentralized finance (DeFi) tokens, such as AAVE, COMP.
2. Prefer small and medium-cap tokens:
Mainly tokens with a market capitalization of less than $1 billion, especially small tokens with innovative technology and community support.
3. Accumulate in batches to control risk:
Although altcoins can yield high returns, they are highly volatile. It is recommended to accumulate in batches to avoid heavy investment at once.