Will the Crypto Market See a Historic Policy Boost? Experts Weigh In
The unexpected victory of Donald Trump in the U.S. presidential election has stirred excitement in the global cryptocurrency market, with many anticipating a shift in the regulatory environment that could significantly benefit the sector.
Investors and industry leaders are optimistic that under Trump’s leadership, the crypto space may experience a reduction in regulatory pressure and greater policy openness. With the Republican Party’s pro-business stance and Trump’s free-market ideology, experts predict a more favorable regulatory environment for cryptocurrencies in the U.S., potentially injecting new momentum into the market. In this climate of optimism, Bitcoin’s price surged to an all-time high of $76,400.
But how exactly will Trump’s election affect the cryptocurrency market? Coindarwin takes a deep dive into the possible policy shifts, Bitcoin’s future, institutional investor expectations, market volatility, and the promotion of DeFi, gathering insights from various professionals in the field.
Policy Shifts and New Directions for Crypto Regulation
Trump’s election victory has reignited hopes for a friendlier regulatory environment for cryptocurrencies.
A report from Bernstein, led by analyst Gautam Chhugani, suggests that Trump’s administration could expedite the replacement of senior personnel at the U.S. Securities and Exchange Commission (SEC), potentially ushering in a “crypto-friendly” chairperson.
With the Republican Party traditionally supporting decentralized finance (DeFi) and stablecoins, there is speculation that legislation like the Digital Commodities Consumer Protection Act may be fast-tracked. Such reforms would clarify regulatory guidelines for the crypto market, providing the industry with the legal clarity it needs to grow.
Paul Grewal, Chief Legal Officer at Coinbase, predicts that the number of crypto-related cases at the SEC will change “dramatically” under Trump’s appointed leadership. Grewal also believes that the new administration will revisit the existing cases filed by Gary Gensler, the current SEC chairman, distinguishing between those that are clear frauds and those that are not.
Coinbase CEO Brian Armstrong expressed optimism about the new political climate, noting that a Republican-controlled Congress will likely be the “most crypto-friendly” in history. He believes this shift will greatly benefit the industry’s compliance and security. These anticipated changes in policy will not only boost market confidence but also accelerate the development and legalization of stablecoin issuers like Circle and Paxos in the U.S.
Additionally, insiders suggest that the House’s earlier passing of the 21st Century Financial Innovation and Technology Act (FIT21) may be at risk of stalling due to Trump’s victory. FIT21 aimed to establish a federal framework for crypto regulation, including jurisdictional clarity between the CFTC and SEC.
However, with crypto lobbying groups now backing more favorable alternatives, the push for FIT21 may be shelved in favor of legislation that better aligns with the new administration’s priorities. With Republicans controlling the White House, Senate, and possibly the House of Representatives, a more lenient regulatory approach seems likely, which could foster a thriving crypto market.
Bitcoin Reserves and Market Outlook
The positive impact of Trump’s victory was immediately reflected in Bitcoin’s price. During the election count, Bitcoin surged past $75,000, setting a new all-time high.
Bernstein analysts predict that Bitcoin’s price could climb further, possibly reaching $90,000 in the near term and even $200,000 by 2025. This optimistic forecast is shared by many market analysts, particularly institutional investors, who are increasingly viewing Bitcoin as “digital gold.”
Tron founder Justin Sun suggested that Trump’s election could trigger a “180-degree turnaround” for the Web3 industry. He believes that Bitcoin’s market performance has yet to fully reflect the potential long-term effects of this policy shift. According to Sun, institutional allocation to Bitcoin will significantly increase, making it a mainstream financial asset, and this trend could accelerate in the coming years.
Market Volatility and Trading Opportunities
Analysts are generally positive about the market’s volatility, seeing it as a new set of opportunities for traders.
Rong Ren Goh, a portfolio manager at Singapore-based Haneya Investments, expects that Trump’s victory will lead to short-term market fluctuations, which could present new opportunities for traders. These fluctuations are expected to stem from the market’s shifting expectations about whether Trump will fulfill his pro-crypto promises.
Over the past few years, the crypto market has faced significant challenges due to regulatory pressure, leading to a loss of confidence among external investors. As the policy direction becomes clearer, these fluctuations could prompt investors to reassess their strategies, creating fresh trading opportunities.
Institutional Investor Attitudes and Capital Inflow
As the regulatory climate becomes more favorable, institutional interest in the crypto market is rising.
James Butterfill, Head of Research at CoinShares, believes that Trump’s policies will trigger a new wave of capital inflow into Bitcoin and other digital assets, especially among institutional investors. Although approximately $29 billion has already flowed into the crypto market this year, Butterfill sees substantial growth potential, particularly as regulatory clarity and policy support improve. Industry experts widely anticipate that as the market matures and becomes more legal, digital assets will gain broader acceptance and further integrate into the traditional financial system.
Bitfinex analysts predict that Trump’s presidency will usher in a “wave of hope” for the crypto market. As federal agencies are expected to take a less hostile stance toward cryptocurrencies, this shift could lead to more capital flowing into the Web3 space. The analysts stated, “We expect a massive release of capital into the crypto market in the short term.”
The Rise of DeFi and Market Vitality
Trump’s victory may also spur the growth of crypto-native sectors, particularly decentralized finance (DeFi). Prior to his election, Trump’s family launched a DeFi project called WIFI, currently in pre-sale, signaling the family’s focus on the DeFi space. While Trump’s victory did not improve the presale results, it highlights his emphasis on decentralized finance.
Rune Christensen, founder of Sky (formerly MakerDAO), expressed on social media that Trump’s win could lead to a “true and sustained revival” of DeFi. Christensen believes that the chances of DeFi user growth increasing tenfold are significantly higher under a more crypto-friendly regulatory environment. He pointed out that DeFi stands to benefit more than other areas of crypto from reduced regulatory uncertainty, as its decentralized nature aligns more closely with the free-market principles supported by the Republican Party.
Conclusion: A New Era for Crypto
In conclusion, Trump’s election victory marks a turning point for the cryptocurrency industry. With expectations of a more favorable regulatory environment, rising institutional interest, and the potential for a booming DeFi sector, the crypto market is entering what could be a historic policy-driven growth phase.
While volatility remains, the clarity brought by a crypto-friendly administration is likely to encourage new capital inflows and accelerate the sector’s integration into the broader financial ecosystem. As the regulatory landscape evolves, the crypto industry is poised for a bright future, with significant opportunities for traders, institutional investors, and blockchain innovators alike.