Background: High Expectations for Trump's Cryptocurrency Policy
On January 20, 2025, U.S. President Donald Trump delivered a speech at his highly anticipated inauguration ceremony. This speech not only marked Trump's second term in the White House but also drew the attention of global investors, business leaders, and policymakers, particularly participants in the cryptocurrency market.
During his campaign, Trump repeatedly expressed his support for Bitcoin and blockchain technology, promising to make the U.S. a global leader in cryptocurrency. The market held high expectations, particularly regarding whether Trump would push for the creation of a national Bitcoin reserve system or introduce favorable policies such as tax incentives and a clear regulatory framework.
However, Trump's inauguration speech did not mention any cryptocurrency-related content. This absence caused market sentiment to plummet, leading to a rapid decline in the prices of mainstream cryptocurrencies like Bitcoin.
Market Reaction to the Speech Absence
According to data from multiple trading platforms, Bitcoin's price surged to an intraday high of $109,299 before the inauguration ceremony, driven by optimistic expectations. However, following the conclusion of Trump's speech, Bitcoin's price quickly plummeted, dropping to around $100,000, with over $100 billion in market capitalization evaporating in a short time.
Key Influencing Factors:
- Policy Expectations Unmet: The market had anticipated that Trump would announce significant cryptocurrency support policies during his inauguration speech, such as the creation of a strategic Bitcoin reserve, but the speech completely omitted this area.
- Market Sentiment Reversal: The gap between investors' high expectations and reality triggered panic selling, especially among short-term investors.
- Technical Correction: After reaching historical highs, Bitcoin faced technical adjustment pressure. Trump's speech acted as a catalyst for this correction.
Ethereum also exhibited a similar trend, falling from $3,379 to $3,200. Other mainstream tokens like Cardano (ADA) and Solana (SOL) recorded declines of over 8%.
Complex Changes in Investor Sentiment
In the context of Trump not mentioning cryptocurrency, investor sentiment quickly shifted from optimism to caution. Some speculative funds chose to exit the market, turning to more stable assets like gold or the U.S. dollar. Meanwhile, institutional investors generally adopted a wait-and-see attitude, awaiting further clarification of Trump administration policies.
Notably, the market still holds a glimmer of hope that Trump will announce related policies in the coming weeks. For instance, there are rumors that Trump's team is preparing an executive order aimed at regulating the stablecoin market and encouraging blockchain innovation.
Trump Family's Cryptocurrency Moves
Although Trump did not mention cryptocurrency in his speech, related activities by his family still attracted market attention.
World Liberty Financial's Major Moves
The Trump family's decentralized finance (DeFi) platform, World Liberty Financial (WLFI), made significant cryptocurrency purchases on the eve of the inauguration ceremony. Public information indicates that the platform spent over $100 million acquiring various mainstream assets, including Bitcoin (wBTC), Ethereum (ETH), and Chainlink (LINK).
Interpretation:
- Market Confidence Statement: This move is seen as the Trump family's long-term optimism towards the cryptocurrency market, attempting to stabilize market sentiment through concrete actions.
- Strategic Positioning: World Liberty Financial's actions may aim to strengthen its market position in the DeFi space while preparing for future policy changes.
Trump and Melania's Meme Coin Spectacle
Another notable action by the Trump family was the issuance of a meme coin. On January 17, Trump launched his personal brand token, "Trump Coin" ($TRUMP), which saw its market capitalization soar to $15 billion in a short time. However, just two days later, Melania Trump launched "Melania Coin" ($MELANIA), causing a market sensation.
This series of actions sparked widespread discussion on social media but also brought potential controversy. The market is concerned that such behavior may involve conflicts of interest and exacerbate the bubble in the meme coin market. Similarly, due to Trump's failure to mention cryptocurrency during the inauguration, $TRUMP, $MELANIA, and other Trump family-related currencies experienced varying degrees of decline.
Industry Perspective: Interaction Between Policy and Market
Trump's policy inclinations are closely tied to market developments. Analyzing his impact requires a multi-dimensional approach.
Long-term Impact of Government Policy on Cryptocurrency
Trump's policy decisions will directly affect the U.S.'s position in the global cryptocurrency market. If the new administration implements the following measures, it will significantly promote industry development:
- Clear Regulatory Framework: Establish a unified legal framework for cryptocurrency exchanges, stablecoin issuers, etc., to reduce legal risks.
- Tax Incentives: Provide tax reductions for long-term holders or blockchain innovation companies to attract more investors and entrepreneurs.
- Promotion of Blockchain Technology: Encourage the application of blockchain in government governance, healthcare, finance, and other fields.
However, if policies trend towards conservatism, such as increasing scrutiny of cryptocurrency transactions or implementing stricter tax policies, it may suppress market vitality.
Demonstration Effect of Family Behavior
The Trump family's high-profile involvement in the cryptocurrency market may have a demonstration effect on other public figures and businesses. However, this also raises concerns about potential conflicts of interest and market manipulation. For example, regulatory agencies may increase scrutiny of public figures issuing tokens to avoid unfair competition in the market.
Market Outlook and Investor Strategies
Possible Future Policy Directions
Although Trump did not mention cryptocurrency in his inauguration speech, market analysts generally believe that his administration may still take the following actions:
- Stablecoin Regulation: Introduce regulations for stablecoins like USDT and USDC to ensure transparency in their reserves.
- Exploration of CBDC (Central Bank Digital Currency): Accelerate the development of a digital dollar to compete with China's digital yuan.
- Innovation Support Programs: Establish a blockchain technology innovation fund to support startups and research projects.
Investor Response Strategies
In the current context of high policy uncertainty, investors should adopt the following strategies:
- Diversified Investment: Reduce holdings in a single asset to increase the portfolio's risk resistance.
- Monitor Policy Dynamics: Closely track policy changes from the Trump administration, especially announcements from the Treasury and SEC.
- Long-term Perspective: Avoid letting short-term fluctuations affect investment decisions, focusing on the long-term value of cryptocurrencies.
Conclusion
The absence of cryptocurrency in Trump's inauguration speech triggered a strong market reaction. This event once again underscores the importance of policy expectations in the cryptocurrency market. Although market sentiment is currently low, the clarification of future policies may bring new development opportunities for the cryptocurrency market.
In this era full of uncertainties, cryptocurrency investors and industry practitioners need to remain highly vigilant to address the challenges and opportunities brought by policy changes and market fluctuations. Regardless, the policy direction of the Trump administration will become an important barometer for the development of the global cryptocurrency industry in the coming years.
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