Author: Socra, Jinse Finance
On November 6, Trump won the US election, which means that the Trump 2.0 era is about to begin. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly hit new highs and breached the $80,000 mark, and Altcoins have also ushered in a long-awaited upward trend.
Due to the rather fierce upward momentum of the current crypto market, many investors are concerned that the current crypto market may be overheated. Investors who have already boarded the train are also considering the market trend after Trump's victory, and even making investment plans for next year after Trump's formal inauguration. In this regard, Jinse Finance has sorted out the forecasts and potential positive and negative events from various authoritative institutions in recent days.
I. Major Events Affecting the Crypto Market
Positive:
1. Inflow of Spot Bitcoin ETFs
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 record high.
On November 7, the BlackRock Bitcoin ETF saw an inflow of $1.1692 billion, the largest inflow since its launch. The top four daily inflows are: $1.1692 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 the target range for the federal funds rate would be lowered from 4.75% to 5.0% to 4.5% to 4.75%, a 25 basis point (bp) decrease.
According to the CME "Fed Watch", the probability of the Fed cutting rates by 25 basis points in December is 71%. The probability of maintaining the current interest rate in January next year is 16.6%, the probability of a cumulative 25 basis point rate cut is 53%, and the probability of a cumulative 50 basis point rate cut is 30.4%.
JPMorgan 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 secured control of the US Senate by winning key Senate seats in Ohio and West Virginia, which means the Republican-controlled Senate is expected to be more supportive of cryptocurrencies, as they are likely to introduce clearer cryptocurrency regulations.
CoinShares: Trump's biggest positive for cryptocurrencies will be the passage of a Bitcoin bill. Meanwhile, Wyoming Senator introduced the "Bitcoin Standard Act of 2024", aiming to establish a strategic Bitcoin reserve and purchase 1 million Bitcoins within five years.
The Trump team is considering nominating Robinhood's Chief Legal and Compliance Officer Dan Gallagher as the next SEC chairman.
SEC crypto-friendly commissioner Hester Peirce is seen as a potential successor to the next chairman.
Ethereum technology expert Vinay Gupta plans to push for crypto policies with the Trump transition team.
Bernstein: After Trump takes office, the SEC and the Senate Banking Committee are expected to take a more friendly attitude towards cryptocurrencies. Crypto assets are expected to be re-rated, as it is still unclear whether these assets qualify as securities.
In addition, stablecoin and market structure bills are likely to make faster progress, which is positive for stablecoin issuers like Circle and Paxos, as well as crypto exchanges and brokers/dealers in the US.
Coinbase's Chief Legal Officer: Hopes the SEC will stop prosecuting cryptocurrencies and start developing rules.
Bitwise Asset Management's Chief Investment Officer believes that the entire crypto industry has been shackled for years, but that should come to an end now. Investors are now starting to position themselves for crypto assets in the coming years.
Paradigm's Head of Policy Research: A former Biden White House staffer said Democrats will no longer fight cryptocurrencies to the bitter end.
CCTV reported that the Bitcoin price hit a new high and mentioned that Trump had promised to establish a strategic Bitcoin reserve.
4. Financial Environment
After Trump's victory, Wall Street institutions such as JPMorgan and Goldman Sachs are seeking potential US stock IPO opportunities for crypto companies, such as Kraken, Fireblocks and Chainalysis.
Matrixport's weekly report shows that the Bitcoin adoption rate is approaching the critical 8% threshold, with about 7.51% of the global population (617 million people) using cryptocurrencies, close to the 8% adoption rate. Reaching this threshold may mark a turning point for Bitcoin's mainstream adoption.
Negative:
Powell: As we approach the neutral interest rate, it may be necessary to slow the pace of rate cuts.
Barclays said it expects the Fed to cut rates only twice, by 25 basis points each time, in 2025, down from its previous forecast of three rate cuts. It expects the Bank of England to keep rates unchanged at its December meeting, having previously forecast a rate cut.
Orion Portfolio Solutions analyst: Since the first rate cut, long-term interest rates have been on a steep upward trajectory and have started to decline after the announcement of the rate cut today. Against the backdrop of a strong US economy, the Fed's future path may be more complex than a steady pace of rate cuts.
II. Forecasts from Various Parties
Bullish:
- Head of Research at Galaxy: Bitcoin has hit new all-time highs multiple times this week, and from a fundamental perspective, the market does not appear overheated.
- Galaxy CEO: Trump's victory could bring "hundreds of billions of dollars" to the crypto ecosystem.
- Nansen analyst also expressed a similar view: "Bitcoin breaking through its all-time high on high trading volume is a clear signal of continued positive momentum post-election."
- JPMorgan: Bitcoin will continue to benefit from Trump's victory for about the next eight weeks, similar to the response in 2016. Trump has repeatedly stated that he will support the digital asset industry and raise tariffs, and both of these policies could ultimately benefit Bitcoin.
- QCP Capital: BTC has experienced a rebound in 3 election cycles, and the price has never fallen back to its previous performance. It is expected that this bullish momentum will remain strong by 2025.
- Standard Chartered: After Trump's victory, Bitcoin will reach $125,000 by the end of this year 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 CEO: From a policy perspective, cryptocurrencies will continue to exist until the industry is established in the US.
- Bitwise Chief Investment Officer: We are entering the golden age of cryptocurrencies, and we will see a strong bull market in the coming years.
- Head of Research at Copper: By January 20, 2025, when Trump takes office as president, Bitcoin's price is likely to reach $100,000. For Bitcoin, Trump witnessed two historical high cycles during his 2016-2020 presidency. Although these gains occurred against the backdrop of a weakening dollar, in contrast to the current environment of a strengthening dollar. However, given that Bitcoin spot ETFs currently hold about 1.1 million Bitcoins, the momentum in the coming months may remain positive.
- CNBC: Bitcoin price could reach $100,000 before the presidential inauguration.
- Bernstein analyst: After Trump's victory, the headwinds for crypto regulation have turned into tailwinds. It is expected that the new "crypto-friendly" chairman of the US Securities and Exchange Commission and the Senate Banking Committee will accelerate regulatory transparency in the industry. The crypto industry is seeking new rules to define digital assets as assets other than securities, the applicability of broker-dealer laws to crypto exchanges and DeFi, accelerate the approval of investment products such as ETFs, and allow banks to own and custody cryptocurrencies.
- MakerDAO founder: Trump's victory will drive a true and sustained revival of DeFi, with a much higher likelihood of a 10-fold increase in user numbers, as DeFi benefits the most from the reduction in regulatory uncertainty in the US compared to other aspects of the crypto space.
Bearish:
- Analyst at Orion Portfolio Solutions: The path to future rate cuts may be more complex. The FOMC announced a 25 basis point rate cut as scheduled in November, indicating a less aggressive pace of cuts compared to September. It is worth noting that since the first rate cut, long-term interest rates have been on a sharp upward trajectory and have started to decline after the announcement of the rate cut today. Against the backdrop of a strong US economy, the path ahead for the Fed may be more complex than a steady pace of rate cuts.
- Scotiabank: Businesses and markets have reason to be cautious about Trump 2.0. Protectionism will be an adverse factor for US and global economic growth. Fiscal stimulus on an overheated US economy will again raise inflation risks and yield increases, further increasing the US fiscal deficit.
Summary
Looking at the mainstream views of major institutions, the vast majority are optimistic about the outlook for the crypto market and believe a new bull market may be on the horizon. In contrast, bearish events and bearish rhetoric have become a "minority view", with the bearish logic mainly coming from the Federal Reserve's slower pace of rate cuts and the potential economic crisis caused by inflation, which may then affect the crypto market. However, based on the overall market situation at this stage, traders who choose to sell or short at this time may be seen as going against the trend.
