The era of Trump 2.0 has arrived: What are the benefits for the market ahead, 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 means the Trump 2.0 era is about to begin. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly set historical highs, approaching the $80,000 mark, and altcoins have also welcomed 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. Investors who have already entered the market are also considering the market direction after Trump's victory and even planning investments for when Trump officially takes office next year. In this regard, Golden Finance has summarized recent predictions and potential positive and negative events from various authoritative institutions regarding the future market.

### Major Events Affecting 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 exceeding $4.1 billion, setting a new historical high.

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

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 may 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 crypto-friendly commissioner Hester Peirce is seen as a potential successor for the next chair.

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

Bernstein: After Trump takes office, 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 investment director 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 policy research director: former Biden White House staffers say Democrats will no longer fight cryptocurrencies to the end.

CCTV reported Bitcoin prices hitting new highs and stated that Trump had 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's adoption rate is approaching the critical 8% threshold, with approximately 7.51% of the global population (617 million people) using cryptocurrencies, nearing 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 in 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, whereas it was previously forecasted to cut rates.

Orion Portfolio Solutions analysts: 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 future path for the Fed may be more complex than a steady rate cut.

### Predictions from Various Parties

Bullish:

• Galaxy's research director: Bitcoin has set multiple historical highs this week, and from a fundamental perspective, the market does not appear overheated.
• Galaxy CEO: Trump's victory could bring "hundreds of billions" to the crypto ecosystem.
• Nansen analysts expressed similar views: "Bitcoin breaking historical highs under high trading volume is a clear signal of sustained positive momentum post-election."
• J.P. Morgan: Bitcoin will continue to benefit 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 three election cycles, all showing a rebound, and prices have never fallen back to previous levels. It is expected that this bullish momentum will remain strong until 2025.
• Standard Chartered: Bitcoin will 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 on SAB 121.
• Coinbase CEO: From a policy perspective, cryptocurrencies will continue to exist until the industry is established in the U.S.
• Bitwise 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 research director: 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 spot Bitcoin ETFs currently hold 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 a 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, expedite the approval of investment products like ETFs, and allow banks to own and custody cryptocurrencies.
• MakerDAO 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 areas of the crypto space.

Bearish:

• Orion Portfolio Solutions analysts: The future path of rate cuts may be more complex. The FOMC's announcement of a 25 basis point rate cut in November 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 of a rate cut. Against the backdrop of a strong U.S. economy, the future path for the Fed 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 disadvantage for U.S. and global economic growth. Implementing fiscal stimulus in an economy with excess demand could again trigger 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 that a new bull market may be on the horizon. In contrast, negative events and bearish sentiments have become the "minority," with bearish logic mainly stemming from the Fed's slowing rate cuts and potential economic crises due to inflation, which may impact the crypto market. However, given the overall market situation at this stage, it is evident that choosing to sell or short now may be seen as going against the trend.