Original | Odaily Planet Daily (@OdailyChina)

Author | Fu Ruo (@vincent31515173)

With Trump's unexpected victory in the U.S. election, the global cryptocurrency market is filled with expectations for the future policy environment. The market generally believes that the Trump administration will bring new opportunities and development prospects for the crypto industry, potentially reducing regulatory pressure and providing a more open policy space. The Republican Party's consistent pro-business stance, combined with Trump's team's free-market thinking, has led market investors and industry leaders to optimistically predict that the U.S. regulatory attitude towards crypto will gradually change, injecting new momentum into the industry. Under such expectations, the price of Bitcoin quickly rose to $76,400, setting a new historical high.

So, how exactly does Trump's election affect the cryptocurrency market? Next, Odaily Planet Daily will analyze from multiple perspectives including regulatory trends, the future of Bitcoin, institutional investor expectations, market volatility, and the promotion of DeFi, and gather insights from various professionals.

Changes in the Regulatory Environment and New Policy Directions

In terms of policy, Trump's victory has reignited hope in the cryptocurrency market.

A report led by Gautam Chhugani from Bernstein's analysis team points out that the Trump administration's arrival will help accelerate the turnover of senior personnel at the U.S. Securities and Exchange Commission (SEC), potentially introducing a "crypto-friendly" new chairperson. The Republican Party's support for decentralized finance (DeFi) and stablecoins may promote the passage of regulations such as the Digital Commodities Consumer Protection Act. These potential policy reforms will help legitimize the crypto market and provide clearer policy guidance for the industry.

Coinbase's Chief Legal Officer Paul Grewal expects that under the leadership of the new chair appointed by Trump, the number of crypto cases at the SEC will undergo "significant changes," and believes the new government will re-examine all existing crypto cases brought by Gary Gensler, distinguishing which cases are clearly scams and frauds and which are not.

Coinbase CEO Brian Armstrong expressed optimism about this prospect, stating that a Congress controlled by the Republican Party is "the most supportive of cryptocurrency in history," and noted that this is a significant benefit for the industry's compliance and security. The new government's policy reforms will not only inject confidence into the market but also accelerate the development of stablecoin issuers like Circle and Paxos, hastening their legalization process in the U.S.

Additionally, insiders revealed that the Financial Innovation and Technology Act (FIT21), which was passed by the House earlier this year, may be shelved due to Trump's victory. FIT21 aims to create a federal framework for cryptocurrency regulation and define the jurisdictional boundaries between the CFTC and SEC. However, as the crypto lobbying group's support shifts towards more favorable legislation, the advancement of FIT21 may be put on hold. This insider pointed out that with the Republican Party controlling the White House, the Senate, and possibly the House, supporting a more favorable alternative bill has become a reasonable choice. Thus, the new regulatory environment may become more lenient, providing a good development space for the market.

Bitcoin Reserves and Market Outlook

The positive impact of Trump's election quickly reflected in the price of Bitcoin. During the election vote counting, Bitcoin briefly surpassed $75,000, setting a new historical high.

Bernstein predicts that Bitcoin's price may further rise to $90,000 in the future, with the potential to reach $200,000 by 2025. This expectation is widely recognized by market analysts, especially for institutional investors, as Bitcoin's value as "digital gold" is increasingly emphasized.

Sun Yuchen pointed out that Trump's election could bring a "180-degree turnaround" for the Web3 industry, believing that Bitcoin's market performance has not yet fully reflected the profound impact of this policy change. Institutional allocation to Bitcoin will significantly increase, making it one of the mainstream financial assets, and this trend may accelerate further in the coming years.

Market Volatility and Trading Opportunities

Analysts hold a positive view on market volatility.

Rong Ren Goh, a portfolio manager at Han Ya Investment in Singapore, believes that Trump's victory will bring short-term market volatility, which presents new opportunities for traders. These fluctuations mainly stem from market expectations regarding whether Trump will fulfill his crypto-friendly promises. Over the past four years, the crypto market has faced numerous challenges due to regulatory pressure, and external investors' confidence in the crypto industry has gradually weakened. As policy inclinations become clearer, market volatility may lead investors to reassess their investment strategies in the crypto market, bringing new trading opportunities.

Institutional Investors' Attitudes and Market Inflows

As Trump's policies shift to be more friendly towards the crypto market, institutional investors' interest in this market is also increasing.

James Butterfill, research director at CoinShares, stated that the Trump administration's policy shift will bring a new wave of capital inflow into digital assets like Bitcoin, especially among institutional investors. Although the crypto market has already attracted about $29 billion in inflows this year, he believes there is still significant potential for growth. Especially with improved regulatory environments and policy support, institutional investors' interest will further increase. Market participants generally expect that as the crypto market becomes legalized, digital assets will be more widely accepted and further integrated into the traditional financial system in the coming years.

Bitfinex analysts expect that after Trump's election as U.S. president, the crypto market will welcome a "new wave of hope." As the industry anticipates that federal agencies will adopt a less hostile attitude towards cryptocurrencies, this trend is expected to promote more capital inflow into the Web3 sector. Analysts stated, "We expect that in the short term, a large amount of capital will be released for the crypto sector."

The Rise of the DeFi Sector and Market Vitality

Trump's victory may also promote the rise of native sectors in the crypto industry, especially DeFi. This is because before the election, his family launched a DeFi project called WIFI, which is currently in pre-sale, indicating his emphasis on the crypto native sector. Although Trump's victory did not improve the pre-sale situation of the project, it shows his focus on the DeFi sector.

Rune Christensen, founder of Sky (formerly MakerDAO), stated on social media that Trump's victory will drive a "real sustained revival" of DeFi, significantly increasing the likelihood of a tenfold growth in the number of users in the DeFi space. Christensen pointed out that DeFi is more likely to benefit from the reduction of regulatory uncertainty in the U.S. compared to other areas of the crypto industry, as its decentralized nature aligns more closely with the free-market principles supported by the Republican Party.

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