The era of Trump 2.0 has arrived: What are the potential benefits for the market, and how much do various parties see?

Author: Socra, Golden Finance

On November 6, Trump won the U.S. election, and his return to the White House signifies the imminent start of the Trump 2.0 era. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly set historical highs, approaching the $80,000 mark, while altcoins have also experienced a long-awaited upward trend.

Due to the strong momentum of the current crypto market rally, many investors are concerned whether the current crypto market is somewhat overheated. Those who have already invested are also considering the market direction after Trump's victory and even making investment plans for when Trump officially takes office next year. In response, Golden Finance has compiled recent predictions from various authoritative institutions regarding the future market outlook and potential positive and negative events.

### Major Events Impacting the Crypto Market

Positive:

1. Inflows into Spot Bitcoin ETF

On November 6, the total trading volume of spot Bitcoin ETFs exceeded $6 billion, with BlackRock's spot Bitcoin ETF trading volume surpassing $4.1 billion, setting a new historical high.

On November 7, BlackRock's Bitcoin ETF saw an inflow of $1.11692 billion, marking the largest inflow since its launch. The top four daily inflow amounts are: $1.11692 billion on November 7; $872 million on October 30; $849 million on March 12; and $788 million on March 5.

2. Interest Rate Cut Cycle

On November 7, Eastern Time, the Federal Reserve announced after the FOMC meeting that it would lower the target range for the federal funds rate from 4.75% to 5.0% to 4.5% to 4.75%, a decrease of 25 basis points (bp).

According to CME's "FedWatch," the probability of a 25 basis point rate cut in December is 71%. The probability of maintaining the current rate in January next year is 16.6%, while the cumulative probability of a 25 basis point cut is 53%, and a cumulative 50 basis point cut is 30.4%.

J.P. Morgan expects the Fed to cut rates quarterly after the December policy meeting until the federal funds rate reaches 3.5%.

3. Favorable Policies and Regulatory Easing

On November 6, the Republican Party gained control after securing key Senate seats in Ohio and West Virginia, meaning the Republicans now have a majority in the U.S. Senate. This could imply that Congress will be more supportive of cryptocurrencies, as the Republican-led Senate is expected to introduce clearer cryptocurrency regulations.

CoinShares: Trump's biggest benefit to cryptocurrencies will be through the Bitcoin Act. Meanwhile, a senator from Wyoming has proposed the "2024 Bitcoin Act," aimed at establishing a strategic Bitcoin reserve to purchase 1 million Bitcoins within five years.

The Trump team is considering listing Robinhood's Chief Legal and Compliance Officer Dan Gallagher as a candidate for the SEC Chair.

SEC Commissioner Hester Peirce, known for her crypto-friendly stance, is seen as a potential successor for the next chair.

Ethereum tech expert Vinay Gupta plans to promote crypto policies to Trump's transition team.

Bernstein: After Trump's inauguration, the SEC and the Senate Banking Committee are expected to adopt a friendly attitude towards cryptocurrencies. It is anticipated that crypto assets will be re-rated, as it remains unclear whether these assets qualify as securities.

Additionally, legislation on stablecoins and market structure may progress more quickly, benefiting stablecoin issuers like Circle and Paxos, as well as U.S. cryptocurrency exchanges and brokers/dealers.

Coinbase's Chief Legal Officer: Hopes the SEC will stop suing cryptocurrencies and start making rules.

Bitwise Asset Management's Director of Investments believes the entire crypto space has been constrained for years, but that should come to an end now. Investors have begun to accumulate crypto assets for the coming years.

Paradigm's Head of Policy Research: Former Biden White House staffers indicate that Democrats will no longer fight cryptocurrencies to the end.

CCTV reports Bitcoin prices hitting new highs and states that Trump once promised to establish a Bitcoin strategic reserve.

4. Financial Environment

After Trump's victory, Wall Street institutions like J.P. Morgan and Goldman Sachs are seeking potential opportunities for crypto companies to go public in the U.S., such as Kraken, Fireblocks, and Chainalysis.

Matrixport's weekly report shows that Bitcoin adoption is nearing the critical 8% threshold, with approximately 7.51% of the global population (617 million people) using cryptocurrencies, close to the 8% adoption rate. Reaching this threshold could mark a turning point for Bitcoin towards mainstream application.

Negative:

Powell: As we approach neutral interest rates, it may be necessary to slow the pace of rate cuts.

Barclays expects the Fed to cut rates only twice by 2025, each by 25 basis points, down from a previous forecast of three cuts. The Bank of England is expected to maintain rates at its December meeting, contrary to earlier predictions of a cut.

Analysts from Orion Portfolio Solutions: Since the first rate cut, long-term rates have been on a sharply rising trajectory and began to decline after today's announcement of a rate cut. Against the backdrop of a strong U.S. economy, the Fed's future path may be more complex than a steady rate cut.

### Predictions from Various Parties

Bullish:

• Galaxy's Head of Research: Bitcoin has set multiple historical highs this week, and from a fundamental perspective, the market does not appear overheated.
• Galaxy's CEO: Trump's victory could bring "hundreds of billions of dollars" to the crypto ecosystem.
• Nansen analysts expressed similar views: "Bitcoin breaking historical highs on high trading volume is a clear signal of sustained positive momentum post-election."
• J.P. Morgan: Bitcoin is expected to continue benefiting from Trump's victory for about the next eight weeks, with effects similar to those seen in 2016. Trump has repeatedly stated that he will support the digital asset industry and raise tariffs, both of which could ultimately benefit Bitcoin.
• QCP Capital: BTC has experienced rebounds in three election cycles, and its price has never fallen back to previous levels. It is expected that this bullish momentum will remain strong until 2025.
• Standard Chartered: Bitcoin could reach $125,000 by the end of this year after Trump's victory, and $200,000 by the end of 2025. In terms of regulation, it is expected that Trump will overturn Biden's veto of SAB 121.
• Coinbase's CEO: From a policy perspective, cryptocurrencies will continue to exist until the industry is established in the U.S.
• Bitwise's Chief Investment Officer: We are entering a golden age for cryptocurrencies, and we will see a strong bull market in the coming years.
• Copper's Head of Research: By January 20, 2025, when Trump takes office, Bitcoin's price is likely to reach $100,000. During Trump's presidency from 2016 to 2020, Bitcoin witnessed two historical high cycles. Although these increases occurred against a backdrop of a weakening dollar, which is different from the current strong dollar environment. However, given that the spot Bitcoin ETF currently holds about 1.1 million Bitcoins, the momentum in the coming months may remain positive.
• CNBC: Bitcoin prices could reach $100,000 before the presidential inauguration.
• Bernstein analysts: After Trump's victory, the headwinds for crypto regulation have turned into tailwinds. It is expected that the new "crypto-friendly" SEC chair and Senate Banking Committee will accelerate regulatory transparency for the industry. The crypto industry is seeking new rules to define digital assets as something other than securities, the applicability of broker-dealer laws to crypto exchanges and DeFi, expedited approvals for investment products like ETFs, and allowing banks to own and custody cryptocurrencies.
• MakerDAO's founder: Trump's victory will drive a true and sustained revival of DeFi, significantly increasing the likelihood of a tenfold increase in user numbers, as DeFi benefits the most from reduced regulatory uncertainty in the U.S. compared to other aspects of the crypto space.

Bearish:

• Analysts from Orion Portfolio Solutions: The future path of rate cuts may be more complex. The FOMC's November announcement of a 25 basis point rate cut marks a reduction in their aggressiveness compared to the September cut. Notably, since the first rate cut, long-term rates have been on a sharply rising trajectory and began to decline after today's announcement. Against the backdrop of a strong U.S. economy, the Fed's future path may be more complex than a steady rate cut.
• Canadian Imperial Bank of Commerce: Businesses and markets have reason to be cautious about Trump 2.0. Protectionism could become a detrimental factor for U.S. and global economic growth. Implementing fiscal stimulus in an economy with excess demand could reignite inflation risks and rising yields, further increasing the U.S. fiscal deficit.

Summary

From the current mainstream views of major institutions, the vast majority are optimistic about the future of the crypto market and believe a new bull market may be on the horizon. In contrast, negative events and bearish sentiments have become the "minority," with bearish logic primarily stemming from the Fed's slowing rate cuts and potential economic crises due to inflation, which could impact the crypto market. However, given the overall market situation at this stage, it is evident that traders choosing to sell or short now may be acting against the trend.