Following Donald Trump’s win in the U.S. presidential election, analysts at research and brokerage firm Bernstein said that crypto’s regulatory headwind had now turned into a tailwind — and the market is “nowhere close to factoring in this shift.”
The analysts, led by Gautam Chhugani, told clients in a Wednesday note they expect a new “crypto-friendly” Securities and Exchange Commission Chair and Senate Banking Committee to accelerate regulatory clarity for the industry. Under current Chair Gary Gensler, the SEC has embarked on several legal battles with key players, including Coinbase, Binance, Kraken and Robinhood, as well as against DeFi, NFT and stablecoin projects.
The crypto industry seeks new rules on defining digital assets as something other than securities, the applicability of broker/dealer laws to crypto exchanges and DeFi, accelerated approvals for investment products like ETFs and enabling banks to own and custody crypto, Chhugani noted.
In particular, the analysts predict faster progress on stablecoin and market structure bills, positively impacting stablecoin issuers such as Circle and Paxos and U.S crypto exchanges. They expect progress on other crypto rules and definitions over the medium term, leading to a re-rating of broader crypto assets outside of bitcoin and ether, which have been “suppressed due to regulatory overhang and lack of clarity on [their] security status.”
Trump’s newfound pro-crypto stance put forward many policy promises during the campaign, including firing Gensler on “day one,” turning the U.S. into a bitcoin mining "powerhouse" and creating a national strategic bitcoin reserve, which the analysts also expect the new administration to make positive steps toward.
The Republicans are also set to pull off a sweep of the presidency, House and Senate, with Trump winning the popular vote, to the surprise of many. “The crypto super PACs were instrumental in sending crypto friendly representatives to the Senate and the House. We expect a new regime of crypto rule making and this transformational shift is not priced in,” the analysts said.
The total crypto market cap breached $2.5 trillion as news of the election result became clear, Chhugani noted. Bitcoin hit a new all-time high above $75,000 earlier on election night and is currently trading for $73,815, according to The Block’s Bitcoin Price Page — up 7% over the past 24 hours. DeFi tokens such as Aave and Uniswap posted double-digit gains, alongside positive pre-market and early trading activity for crypto-related stocks like Coinbase and MicroStrategy on Wednesday.
The analysts warned that the market’s initial reaction might be to “sell the news” but suggested any such dip was a buying opportunity for crypto and related stocks, reiterating their call for bitcoin to move closer to $90,000 by the end of this year, and reach a bull cycle target of $200,000 by the end of 2025 under the president-elect.
Gautam Chhugani maintains long positions in various cryptocurrencies.
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