Author: @SpartanBlack_1
Translated by: Baihua Blockchain
Trump won a resounding victory in this U.S. presidential election, and the Republican Party also won the Senate, and is likely to control the House of Representatives. This overwhelming victory will give the Republican Party the ability to push through a number of reforms. The cryptocurrency field is expected to see major changes, and we believe the next 12 months will be positive for crypto assets.
There has been a lot of discussion about the impact of this major event on cryptocurrencies:
1) Gary Gensler will step down, and he may be replaced by someone more supportive of cryptocurrencies. This means that existing enforcement actions will be withdrawn, and the SEC will take a more cooperative approach. This will reduce the legal risks for many existing projects and founders who launched Tokens since 2017;
2) We will have the most crypto-friendly Congress, which is likely to lead to a regulatory framework that is conducive to innovation. This will make it easier for new projects to raise funds and attract more institutional capital into the market;
3) The idea of a strategic Bitcoin reserve for the U.S. has been proposed. If this plan materializes, the selling pressure on Bitcoin will no longer be an issue, and the market may even start to speculate whether the U.S. government will become a net buyer of Bitcoin. Considering that just Microstrategy's buying behavior has driven up the price of Bitcoin, imagine the impact if the U.S. government had a strategic Bitcoin reserve;
4) World Liberty Finance will be launched. Imagine if such a plan was driven or associated with the U.S. President, what that would mean for DeFi. Whether they raise $300 million or $30 million, this project will mean far more to DeFi builders and innovators than the scale of its funding.
Each of the above events alone would be enough to have a major driving force on the crypto market. The combined effect of these events will have a profound impact on the crypto industry, and the market has not yet fully reflected this. This is why the media is calling this period the "golden age of crypto".
Some may question whether Trump will implement these plans. I believe he most likely will. Trump does not play by the usual rules, and this election victory has given him tremendous leverage. In addition, Trump has two crypto-savvy advisors - Elon Musk and JD Vance. With an increasingly crypto-friendly Congress, it will not be difficult to push these plans forward.
In addition to the above points, another discussion that has received less attention but is equally important is that Trump has stated that he wants to make the U.S. the global capital of cryptocurrencies. Currently, the U.S. is the center of global Web3 innovation, with many important infrastructure projects and large decentralized applications (dApps) originating from the U.S. At the same time, the U.S. has some of the largest trading platforms, brokers, and the largest Web3 venture capital pool globally. Benefiting from China's withdrawal, the U.S. now accounts for about 40% of global Bitcoin mining capacity (17% in 2021), becoming the world's largest Bitcoin mining center. Most cryptocurrency trading is also denominated in U.S. dollars. Therefore, from many perspectives, the U.S. has already become the center of global cryptocurrencies. If the U.S. government intends to consolidate its dominant position, what does that mean for other governments, especially major financial centers like London, Tokyo, Dubai, and Hong Kong? More importantly, can Europe afford to miss out on the Web3 innovation wave, after missing the Web2 innovation wave?
Finally, let's look at the price performance. Historical data shows that regardless of who wins the U.S. presidential election, the 12 months following the election are usually a period of strong crypto price performance, regardless of interest rate trends:
November 2012 - November 2013 (Obama, stable interest rates): +2326%
November 2016 - November 2017 (Trump, rising interest rates): +896%
November 2020 - November 2021 (Biden, stable interest rates): +351%
The reasons for this are varied, it could be the policy clarity brought by the election results, or the optimistic sentiment towards the new government, or the driving force of the Bitcoin halving/crypto cycle, or more likely a combination of these factors. During the post-election periods in the past two elections, Altcoins (represented by ETH) typically achieved about 3 times the gains of Bitcoin.
The special feature of the 2024 election is that there is a clear crypto agenda in this election, and the winning president and his core advisors all support cryptocurrencies. The U.S. Congress is now also composed of a large number of crypto-friendly senators. Although economists expect Trump's policies may bring inflationary pressures, the market still expects interest rates to trend downward over the next 12 months. If history can be used as a reference, the market outlook for the next 12 months should be very optimistic.
