I. Introduction
On November 6, the dust settled on the US presidential election, and Donald Trump was successfully elected. This result has attracted widespread attention globally, especially in the Bit cryptocurrency field. In recent years, the regulatory environment for Bit in the US has been relatively strict and uncertain, and Trump's re-election is seen as a potential turning point for US Bit policy. During the campaign, Trump expressed support for Bit on multiple occasions, promising to make the US the "global capital of Bit" and proposing policies such as establishing a national strategic Bit reserve.
The expectation of a series of Bit policy improvements after Trump's election has left investors full of expectations for the future of the Bit industry, and the Bit market has seen a significant rise in a short period of time, with Bit soaring, breaking through $90,000 this week, and other cryptocurrencies also experiencing a general upward trend. This article aims to analyze the potential impact of Trump's election on US Bit policy and market trends, and to propose corresponding investment strategy recommendations.
II. Trump's Bit Policy Commitments
During the 2024 US presidential campaign, compared to Democratic candidate Kamala Harris, Trump has shown a more positive and open attitude towards Bit policy and has put forward a series of policy commitments aimed at promoting the development of Bit.
1. Change in Attitude: From Skepticism to Support
As early as 2019, Trump had tweeted that he was "not a fan of Bit", believing that they "are not money" and pointing out their volatile prices and lack of reliability. He also criticized Facebook's Libra project, emphasizing that it had "almost no standing or dependability", and hinted that US regulatory agencies would regulate it.
However, by 2024, Trump's attitude had undergone a significant change. He began to express support for Bit in public, emphasizing its potential in the future financial system. This shift may have been influenced by a variety of factors, including the rapid development of the Bit market, the increased public acceptance of digital assets, and changes in the political environment.
2. Supportive Statements and Positions During the Campaign
May 9, 2024: Statement at the NFT Gala
At the NFT gala held at Mar-a-Lago, Trump stated, "If you support Bit, you'll vote for Trump, because they (the Biden administration) want to end it." When asked about his views on Central Bank Digital Currencies (CBDCs) and "government blockchains", Trump responded, "I think it all has its place." He continued, "We have some incredible things happening, I mean, looking back a few years ago at Bit, people said it wouldn't succeed, but now the numbers are at record levels. I guess you could say it's a form of currency, and I think I support that, I'm more and more supportive of that."
May 28, 2024: Bit and National Debt Issue
David Bailey, CEO of Bitcoin Magazine and a crypto advisor to Trump's campaign team, revealed that Trump had inquired about the possibility of using Bit to address the US national debt problem. This statement indicates that Trump has shown interest in the potential role of Bit in macroeconomic issues.
June 8, 2024: Commitment at a Fundraising Event
At a fundraising event in San Francisco, Trump stated that he would become the "Bit president" and promised that within an hour of taking office in his second term, he would stop the "persecution" of Bit by the Biden administration and SEC Chairman Gary Gensler. He emphasized that he would adopt a more friendly regulatory policy and support the development of the Bit industry.
July 28, 2024: Speech at the Bit Conference
At the Bit conference held in Nashville, Trump stated that he would make the US the "global capital of Bit" and the "world's Bit superpower". He also promised that on his first day in office, he would fire the current SEC Chairman Gary Gensler, and stated, "Bit may be our last line of defense against CBDCs, and it will help us dominate the energy sector."
3. Campaign-Related Actions Involving the Bit Industry
Accepting Bit Donations
In May 2024, Trump's campaign team announced that it would accept Bit donations, allowing supporters to donate using various cryptocurrencies through the Coinbase Commerce platform. This move demonstrates Trump's open attitude towards Bit and his desire to attract more Bit supporters.
Participating in Bit Transactions
In September 2024, Trump used Bit to purchase burgers and beer at a Bit-accepting bar in New York City, becoming the first US president to conduct a Bit transaction. He stated that the payment process was "very simple" and praised the convenience of Bit. This action was seen as a symbolic gesture of his support for cryptocurrencies.
Launching NFT Projects
Trump launched multiple NFT projects during the campaign, including the "Trump Digital Trading Cards", to further demonstrate his support for cryptocurrencies and blockchain technology. These NFTs received a positive market response, showcasing his influence in the digital asset space.
Interacting with the Bit Community
Trump actively participated in Bit community events, including attending Bit conferences and meeting with Bit entrepreneurs. In these occasions, he emphasized the importance of Bit and promised that under his leadership, the US would become the global leader in Bit.
4. Summary of Bit Policy Commitments
Establishing a National Bit Reserve
Trump has promised that if elected, he will establish a national Bit reserve, holding all Bit owned by the government and using it as part of the national strategic reserve. He believes that Bit has long-term appreciation potential and that the government should hold and leverage its value.
Forming a Bit and Cryptocurrency Presidential Advisory Council
Trump has repeatedly stated that if re-elected, he will fire the current SEC Chairman Gary Gensler and appoint more Bit-friendly regulators, as well as establish a Bit and Cryptocurrency Presidential Advisory Council to formulate and implement policies that are favorable to the Bit industry, ensuring the US's leading position in this field.
Opposing Central Bank Digital Currencies (CBDCs)
Trump has clearly expressed his opposition to the US issuing CBDCs, believing that this would lead to excessive monitoring of citizens' financial activities and infringe on personal privacy. He emphasizes that the government should not control or monitor citizens' financial transactions and supports individuals' right to self-custody their digital assets.
Supporting Bit Mining
He stated that he will defend the right to Bit mining, as he believes this not only contributes to the development of Bit, but also promotes innovation and growth in the energy sector. He pointed out that Bit mining can help stabilize the energy supply of the power grid, bringing economic and environmental benefits.
Formulate a comprehensive cryptocurrency policy
Trump has promised to formulate a comprehensive cryptocurrency policy covering everything from stablecoin regulation to Bitcoin self-custody, ensuring the United States' leading position in this field. He emphasized that the government should provide clear guidance for the cryptocurrency industry, promote innovation, and protect consumer interests at the same time.
Reduce the sentence of Ross Ulbricht, the founder of the Silk Road
At the Libertarian National Convention in Washington, D.C., Trump promised that if he is elected president again, he will commute the sentence of Ross Ulbricht, the founder of the Silk Road, on his first day in office. He believes that Ulbricht's case reflects the government's excessive crackdown on cryptocurrencies, and promises to take a fairer approach to similar cases.
III. Current Cryptocurrency Regulation in the United States, Issues, and Potential Changes
1. Current Regulatory Agencies and Their Functions
Cryptocurrency regulation in the United States involves multiple agencies, primarily including:
Securities and Exchange Commission (SEC): Responsible for regulating projects that view cryptocurrencies as securities, particularly activities such as Initial Coin Offerings (ICOs). The SEC has classified many cryptocurrency projects as securities, requiring them to comply with relevant securities laws and regulations.
Commodity Futures Trading Commission (CFTC): Treats cryptocurrencies such as Bitcoin and Ethereum as commodities, and regulates their derivatives markets. The CFTC oversees cryptocurrency futures and options, ensuring the fairness and transparency of the market.
Financial Crimes Enforcement Network (FinCEN): Belonging to the Department of the Treasury, responsible for enforcing anti-money laundering (AML) and know-your-customer (KYC) policies, requiring cryptocurrency exchanges and wallet service providers to comply with relevant regulations to prevent illegal activities.
Internal Revenue Service (IRS): Treats cryptocurrencies as property, requiring taxpayers to report their holdings and transactions, and pay the corresponding taxes.
2. Issues with the Current Regulatory Framework
Fragmented Regulation: The responsibilities of different regulatory agencies in the United States are scattered, leading to a fragmented regulation of the cryptocurrency industry. The SEC and CFTC have disputes over how to define cryptocurrencies as securities or commodities, making it difficult for businesses and investors to understand the regulatory boundaries of their assets.
Lack of a Clear Legislative Framework: Although agencies such as the SEC and CFTC have conducted cryptocurrency regulation in their respective areas, the United States still lacks a comprehensive legislative framework for cryptocurrencies, unable to provide clear legal guidance for this field. Many projects need to spend a lot of resources to ensure compliance before launching in the United States, and this uncertainty has led some projects and companies to choose to migrate to countries with more friendly regulatory environments.
Restricting Innovation and Market Competitiveness: The SEC's strict securities regulation of cryptocurrency projects, and the CFTC's certain restrictions on commodity regulation, have a suppressive effect on innovation. The overly stringent regulation makes it more difficult for U.S. cryptocurrency companies and startups to develop.
Tax Complexity: The IRS's tax requirements for cryptocurrency transactions are complex, especially when cryptocurrencies are highly volatile, making it difficult for users to accurately report. For many ordinary users, this tax complexity increases the cost of cryptocurrency transactions, limiting market activity.
3. Potential Changes Under the Trump Administration
After Trump's election, the U.S. cryptocurrency regulatory environment may undergo the following changes:
Relaxed Regulatory Environment: Dismissing the current SEC chairman and replacing the leadership may lead to a change in the SEC's regulatory attitude towards cryptocurrencies, relaxing the regulation of cryptocurrency projects and encouraging innovation.
More Inclusive Policy-Making: Establishing a cryptocurrency advisory committee may make the policy-making process more inclusive, incorporating industry opinions, and formulating regulatory policies that better meet market needs.
Increased Market Confidence: Establishing a national Bitcoin reserve may demonstrate the government's recognition of Bitcoin, potentially boosting market confidence and attracting more investors to the cryptocurrency market.
Strengthened Privacy Protection: Opposing the issuance of a Central Bank Digital Currency (CBDC) may protect citizens' financial privacy and prevent the government from excessive monitoring of personal financial activities.
Accelerated Industry Development: Supporting Bitcoin mining and cryptocurrency innovation may promote the development of related industries, enhancing the United States' global competitiveness in the cryptocurrency field.
IV. Market Reactions in the First Week After Trump's Election
1. Surge in Cryptocurrency Prices
After Trump's election, the cryptocurrency market reacted quickly, with the price of Bitcoin in particular reaching a new all-time high of $75,000 on the day the election results were announced, and surpassing $90,000 within a week. This surge reflects the market's positive expectations for Trump's cryptocurrency policies and investors' optimistic outlook on the future economic situation. Other cryptocurrencies such as Ethereum, Solana, and meme coins also saw significant increases, and the total market capitalization of cryptocurrencies grew by 26% within a week, exceeding $3 trillion as of November 14.
Source:https://coinmarketcap.com/charts/
2. Generally Optimistic Investor Sentiment
Investor sentiment is generally optimistic, with many cryptocurrency industry leaders and investors expressing support for Trump's election on social media. MicroStrategy founder Michael Saylor even referred to Trump as the "Bitcoin President" and said this victory signifies the arrival of the spring for the cryptocurrency industry. Coinbase CEO Brian Armstrong also welcomed the "most crypto-friendly Congress in U.S. history," and this positive market atmosphere has undoubtedly boosted investor confidence. The market sentiment has shifted from neutral to extremely greedy this week.
Source:https://coinmarketcap.com/charts/fear-and-greed-index/
3. Increase in Cryptocurrency-Related Stocks and ETFs
Affected by the expected Trump policies, cryptocurrency-related stocks and ETFs have performed positively. On the exchange side, major compliant exchanges like Coinbase and Robinhood have seen significant gains. Regarding mining, companies like Cipher Mining, Riot Platforms, and Canaan Inc. ADR have also experienced substantial growth, influenced by Trump's proposal to develop Bitcoin mining in the United States. Since November 6, Bitcoin and Ethereum spot ETFs in the United States have seen sustained and significant net inflows.
Source:https://coinmarketcap.com/etf/
MicroStrategy (MSTR), a major Bitcoin holder, has risen by about 13.2%. On November 12, MicroStrategy founder Michael Saylor posted on social media that this year, MicroStrategy's capital operations have achieved a 26.4% BTC return rate, generating a net profit of about 49,936 BTC for shareholders. This is equivalent to 157.5 BTC per day, without the need to pay the usual operating costs or capital investments associated with Bitcoin mining.
Source:https://x.com/saylor/status/1856321148373393786?s=46&t=bcMyidYO0QkS5ajIW9CBdg
V. Analysis of the Subsequent Trend of the Crypto Market
1. Short-term Trend
Market Reaction: After Trump's election, the cryptocurrency market rebounded quickly, with the prices of mainstream digital assets such as Bit and Ethereum rising significantly, as investors are full of expectations for Trump's policy commitments. This price fluctuation reflects investors' optimistic sentiment about future policies, and it is expected that the crypto market will continue to be driven by positive sentiment in the short term. According to forecasts, Bit's price may break through $100,000 by the end of 2024, and some analysts even expect it to reach $150,000.
Investor Sentiment: Investors generally believe that Trump's election will lead to a more relaxed regulatory environment and favorable economic policies. This optimistic sentiment may result in more capital flowing into the crypto market, and speculative trading may increase.
Increase in Trading Activity: With the surge in market sentiment, trading activity may also increase significantly. Investors will be more actively involved in cryptocurrency trading, and speculative trading may become the dominant trend, especially in the face of increased policy uncertainty. This situation will lead to increased market volatility, and prices may experience violent fluctuations in the short term.
2. Medium and Long-term Trend
Policy Implementation and Industry Development: In the long run, whether the Trump administration can fulfill its commitments to cryptocurrencies will directly affect the development of the industry. If Trump can successfully implement relevant legislation, such as the "21st Century Financial Innovation and Technology Act" (FIT21) and the "Stablecoin Act", the United States has the potential to become the global leader in cryptocurrencies. These policies will provide a clear regulatory framework for the industry, thereby attracting more companies and investors to enter the market.
Technological Innovation and Capital Inflow: The Trump administration is expected to support financial technology innovation, including the development of blockchain technology and digital currencies. This may be reflected in increased R&D funding, stronger patent protection, and collaboration with the private sector. With more capital inflow, the status of cryptocurrencies as a hedge asset may also be enhanced, further driving the development of the market.
3. Potential Risks and Challenges
Policy Uncertainty: Although Trump has promised to support cryptocurrencies, if he is unable to effectively implement his commitments, or if new regulatory measures emerge, it may lead to a decline in market confidence. In addition, there may be resistance during the policy implementation process, leading to uncertainty.
Risk of Market Overheating: The rapid rise in the market in the short term may lead to bubble risks, and a price correction needs to be watched out for.
Global Regulatory Environment: Changes in regulatory policies in other countries may also affect the global crypto market trend, and close attention needs to be paid.
VI. Investment Strategy Recommendations and Summary
1. Strategies for Different Types of Investors
Conservative Investors: It is recommended to allocate the majority of funds to mainstream cryptocurrencies such as Bit and Ethereum, as they have larger market capitalizations and relatively lower volatility. At the same time, maintain a moderate cash ratio to cope with market fluctuations.
Moderate Investors: In addition to holding mainstream cryptocurrencies, you can appropriately allocate a portion to medium-sized, promising tokens. At the same time, pay attention to the fundamentals and technical development of the projects.
Aggressive Investors: In addition to mainstream and medium-sized tokens, you can allocate a portion to emerging project tokens, but you need to thoroughly research the project background, assess the risks, and take appropriate stop-loss measures.
2. Risk Assessment and Management Recommendations
Diversified Investment: Avoid investing all funds in a single asset, and diversify investments to reduce risks.
Set Stop-loss Points: Set stop-loss points for each investment to prevent losses from escalating.
Continuous Learning: Stay informed about market dynamics and adjust investment strategies in a timely manner.
Psychological Preparation: The cryptocurrency market is highly volatile, and investors should remain calm and avoid emotional trading.
In summary, Trump's election has had a positive impact on the cryptocurrency market, with market sentiment and prices rising in the short term. The medium and long-term trend will depend on the effectiveness of policy implementation, changes in the regulatory environment, and the market's own development. Investors should remain cautious, pay attention to policy trends and market risks, develop investment strategies that suit their risk tolerance, manage risks, and make rational decisions.
