The impact of Trump's election on the cryptocurrency market

In a previous article, I shared my views on the impact of Trump's election on the entire crypto ecosystem.

During an online discussion on Saturday, a reader asked a similar question, and I added two points on how Trump's election might affect crypto projects from the perspective of crypto initiatives.

This impact may lead to a significant differentiation in financing methods and operational approaches among projects of different sizes in the future.

If Trump can truly fulfill his pre-election promises to the crypto ecosystem, then overall, the crypto ecosystem and the enterprises (projects) within it will face a much more lenient environment in terms of major policies. This means that the following two types of activities will become increasingly vigorous:

The first is that the traditional financial sector will increasingly accept crypto enterprises, and more capital will seek opportunities within the crypto ecosystem. This primarily affects large projects within the ecosystem, especially those related to infrastructure or underlying applications.

The second is that enterprises or project parties already within the crypto ecosystem will have more motivation and enthusiasm to make some bold, exploratory moves, such as issuing tokens. This mainly affects small and medium-sized projects within the ecosystem, especially some innovative application projects.

Let's first look at the first point.

In recent years, the traditional financial sector in the U.S., led by major institutions (such as BlackRock), has increasingly accepted the crypto ecosystem.

This acceptance not only means that they have undergone a 180-degree shift in their values regarding crypto assets but also reveals their considerations regarding real-world interests— they do not want to miss out on the financial benefits that crypto enterprises and assets may generate during their growth.

Previously, they were constrained by the stance of the U.S. Securities and Exchange Commission, only able to take small steps forward and then retreat. Now, with a president and vice president who clearly support the crypto ecosystem (let's not forget that Vance had worked in the venture capital industry before running for office and has close ties with Silicon Valley elites, and he has Bitcoin in his asset allocation; not to mention Trump himself has issued several rounds of NFTs and is operating a new crypto project), how could institutions pass up such an opportunity?

Recently, I noticed an interesting phenomenon in my social circle, where someone frequently shared news about two crypto companies preparing to go public:

One is Circle (the parent company of USDC), and the other is Kraken.

At the end of the news shares, the sharer added a note: "Friends interested in participating in the private placement, please contact me privately, as the shares are limited, so act quickly."

In addition to these two companies, there have also been frequent rumors about the well-known market maker Wintermute preparing to go public, with reports that a certain domestic internet giant has participated in Wintermute's financing.

The fact that these large projects are all revealing their plans to go public at this time is, in my opinion, not a coincidence but a phenomenon that is bound to occur as the ecosystem develops to this stage.

I believe there are three main reasons for this:

First, the crypto ecosystem has developed to a point where a significant number of large projects can no longer solve their problems through the previously niche ICO financing method; they require increasingly larger capital, which can only be met by traditional finance.

Second, the traditional method of issuing tokens to solve investor exits seems to have become unfriendly to private investors in recent years, with lock-up restrictions, insufficient liquidity, and other constraints greatly limiting their profit exits. At this stage, even retail investors are no longer willing to play along, preferring to invest in meme coins rather than capital coins. Therefore, these investors must find alternative ways to realize their exits.

Third, previously, due to various restrictions, the resistance to native crypto enterprises going public was very high. Over the years, among the crypto enterprises listed in the U.S. stock market, aside from mining companies and MicroStrategy, there has only been Coinbase as a truly native crypto enterprise. Even Coinbase, the sole survivor, has faced ongoing harassment and inquiries from the U.S. Securities and Exchange Commission after going public.

The first two reasons will lead traditional financial markets to increasingly become a channel for solving problems for both sides, but this channel has been ruthlessly blocked by the third reason.

Now, with Trump about to take office, the barrier that has stood between the two sides is likely to be removed.

Therefore, in the foreseeable future, more and more crypto enterprises or projects that require high funding, especially those needing significant investment in research and operations, may choose the path of going public—this not only facilitates these enterprises in raising large amounts of capital but also allows traditional financial institutions to quickly and efficiently gain benefits from the crypto ecosystem.

In the future, the relationship between these enterprises and retail investors will become increasingly tenuous. Because choosing this path means that the probability of these projects issuing tokens will decrease, and even if they do, it will likely be negligible. Although they may wear the guise of crypto, they will resemble traditional enterprises more.

On the other hand, as the crypto environment becomes more lenient, I believe that the likelihood of more small and medium-sized projects, especially innovative projects, issuing tokens will also increase—issuing tokens is an efficient means for small projects to kickstart quickly.

This is what I mentioned earlier: "Enterprises or project parties already within the crypto ecosystem will have more motivation and enthusiasm to make some bold, exploratory moves, such as issuing tokens."

Recently, Polymarket, which has been in the spotlight during this election, has been rumored to be issuing tokens.

I believe this indicates that project parties are betting on the upcoming relaxation of the crypto industry to some extent. There will be more such opportunities in the future, but they will mainly be limited to small innovations and applications.

Because they do not require large capital or significant investment at the initial stage; what they need is popularity and participation. Airdrops and token issuance expectations are the best incentive methods.

Therefore, we retail investors can pay appropriate attention to some active, emerging small applications and look for opportunities that belong to us among them.

However, I still advise everyone to consider their time, energy, and financial capacity when participating in these small applications. Be sure to act within your means and avoid betting everything on a single project.

The era of betting everything on a single project or specifically establishing studios to chase any project's airdrop is long gone.