The "crypto" industry welcomes a new president. How will Trump's return to the White House affect the financial market?

Bitcoin uses ATH to welcome the new market expectations.

Author: Chandler, Foresight News

Cover: Photo by Edoardo Cuoghi on Unsplash

With Trump winning 19 electoral votes in Pennsylvania, the 2024 US presidential election is basically over.

On November 6, FoxBusiness reporter Eleanor Terrett wrote that in fact, the first "crypto president" will now be Trump.

The crypto market responded to this result first. On November 6, Bitcoin reached a high of 75656 USDT during the day, breaking the high of 73775.9 USDT set in March this year, and continued to hit a new high. The capital market is the same, the US dollar index rose by nearly 1.5%, and the S&P 500 and Nasdaq 100 index futures rose by more than 1.1%.

As the election enters the final stage, investors' focus is beginning to focus on the impact of the new president's inauguration on the market.

The July "Bitcoin" Declaration

Let's first review Trump's commitments to crypto when he attended the Bitcoin conference in the US in July this year:

• "On the first day, I will fire Gary Gensler and appoint a new SEC chairman. If elected, establish a strategic national Bitcoin reserve for the US government. The US government will retain 100% of its Bitcoin. Do not sell your Bitcoin."
• "Bitcoin may one day exceed the market value of gold. I reaffirm my commitment to reducing Ross Ulbricht's sentence."
• "There will never be a CBDC during my presidency as President of the United States."
• "If elected President, Bitcoin and cryptocurrencies will soar like never before."
• "Bitcoin does not threaten the dollar, the current US government threatens the dollar. The US will become the global capital of cryptocurrencies and the world's Bitcoin superpower."
• "Bitcoin represents freedom, sovereignty and independence from government coercion and control. I assure the Bitcoin community that on the day I take office, Joe Biden and Kamala Harris's anti-cryptocurrency campaign will end."

How will the US election results affect the crypto market

Soochow Securities previously sorted out four scenarios based on the presidential party, and derived their impact on asset prices, in which if the Republicans sweep (43%), US stocks > US dollar > gold > US bonds. It pointed out that whether the US president's policies can be smoothly promoted, implemented and implemented, and whether they can be supported by Congress, is particularly important.

On the one hand, in this scenario, Trump would be able to implement and carry out his policy proposals more smoothly, significantly reducing taxes on domestic companies and relaxing regulations, which would provide a strong boost to the US stock market; on the other hand, the policy resonance (tariff hikes + tighter immigration) would increase the risk of re-inflation in the US, which would be potentially positive for the US dollar, but would put pressure on the long-end of the US bond market, leading to sell-offs.

Trump's tax cuts and relaxed regulatory policies, if implemented, would make the capital markets highly attractive, and the cryptocurrency market may see a short-term influx of funds as a result. Tax cuts would reduce the tax burden on businesses and individuals, increasing the funds available for investment, and cryptocurrencies could become one of the important channels for these funds to flow into. Relaxed regulations would also reduce the compliance burden on cryptocurrency companies, encouraging innovation and boosting capital confidence in the cryptocurrency market. For mainstream assets like Bitcoin and some highly Meme-like Altcoins (such as DOGE), the increase in market funds could push up their prices and to some extent increase the market activity of these assets.

From a long-term perspective, if Trump's policies are further advanced, in an environment of low interest rates and loose fiscal policy, the market tends to prefer high-yield, high-liquidity investments, and cryptocurrencies are gradually meeting this preference. At the same time, if the regulatory costs of the cryptocurrency market are relatively low, the willingness of institutional investors to participate will also increase, which will help the scale and application of the cryptocurrency market to gradually expand.

Furthermore, regardless of the election outcome, changes in the control of the White House and Congress could have a significant impact on the regulatory environment and future development of cryptocurrencies. Control of the Senate is particularly crucial for the cryptocurrency industry, as it plays a decisive role in confirming the leadership of key regulatory agencies (such as the chairs of the SEC and CFTC).

In addition, if Trump can return to the White House, the implementation of the cryptocurrency policies promised in his campaign will also have an important impact on the future development of the cryptocurrency industry.

Implementation of Cryptocurrency Policies

Trump clearly stated in his campaign that he supports cryptocurrency innovation and plans to promote industry growth through deregulation. He also proposed a plan to make Bitcoin a strategic reserve asset for the United States.

Republican Senator Cynthia Lummis has also introduced the "Bitcoin Reserve Act" and submitted it to Congress for review by the Senate Banking Committee. The bill aims to establish a strategic Bitcoin reserve and other initiatives to ensure transparent management of the federal government's Bitcoin holdings, utilize certain resources of the Federal Reserve System to offset costs, and other purposes. The bill will subsequently go through the Senate, House, and presidential review and approval before becoming law.

If Bitcoin is designated as a strategic reserve asset for the United States, it would have significant symbolic significance and practical impact. On the one hand, this would mark the transformation of Bitcoin from a niche asset to a nationally recognized reserve asset, greatly enhancing its legitimacy and acceptance. This policy change would confer a new status on Bitcoin and significantly boost market confidence in its long-term value.

On the other hand, as a strategic reserve asset, Bitcoin would, along with gold, foreign exchange reserves, and other traditional reserve assets, provide economic stability and financial security for the country. This recognition could further consolidate Bitcoin's position in the global financial system and prompt more central banks and governments around the world to re-evaluate their stance on Bitcoin and digital assets. Especially in the context of seeking to hedge against US dollar volatility and economic uncertainty, this policy shift would have a demonstrative effect, prompting more countries to include Bitcoin in their reserve assets to diversify their reserve assets and manage risks, further expanding the global market demand and adoption rate of Bitcoin.

However, it should be noted that in the policy-making and implementation of the US President, the traditional process and the complex political environment are inseparable. The President's policy commitments, from the campaign blueprint, often have to go through a meticulous policy operation process before they can reach the actual governance stage. Overall, the implementation of the US President's policies is closely related to the interaction between Congress, the judiciary, and the executive agencies. After the new President takes office, whether his policies can be fulfilled ultimately depends on several key factors: party distribution, the application of executive orders, legislative support from Congress, and the broader social opinion base.

Gary Gensler's Tenure

After the 2024 US presidential election, the days of Gary Gensler as the Chair of the US Securities and Exchange Commission (SEC) will be numbered. Gensler's term will expire in January 2026, but traditionally, when the new President is from the opposing party, the SEC Chair often resigns. Therefore, if Trump is elected, the pressure on Gensler will increase significantly, especially as his confrontational stance towards the cryptocurrency industry has become increasingly apparent. Trump has explicitly stated on multiple occasions that if elected, he will fire Gensler, which means his departure is almost a foregone conclusion.

Since taking office as SEC Chair in 2021, Gensler has taken a tough stance towards the cryptocurrency industry, emphasizing that existing securities laws are sufficient to regulate cryptocurrencies and using enforcement actions to regulate the industry.

According to data from the Blockchain Association, the US cryptocurrency industry has spent over $400 million to address the enforcement actions of the SEC since Gary Gensler became its Chair. During this period, the SEC has filed lawsuits against some major cryptocurrency companies, including Coinbase and Kraken. The Blockchain Association stated that the $400 million is only "a small part" of the industry, as this is based on a sample survey of its association members.

If Trump is confirmed as the winner, Gensler's departure will become a focus of attention. While he may continue to serve at the SEC, according to convention and the current political climate, his resignation is almost a foregone conclusion.

In summary, the recent rise in Bitcoin's price is clearly reflecting the market's expectation of the relaxed policies that a Trump victory would bring. Capital is pricing in the potential benefits in advance to hedge against this anticipated risk. If US policies can balance compliance and innovation, it will further enhance the widespread adoption and legitimacy of cryptocurrencies, especially the hedging properties and growth potential of assets like Bitcoin.

In the long run, the price trend of cryptocurrencies will still be closely related to their market acceptance, the strength of policy support, and global capital flows. The clarity and sustainability of policies will be a key factor for investors to regain confidence in the near future.

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