Author: Jack Inabinet, Bankless; Compiled by: Tong Deng, Jinse Finance
With the rise in crypto prices, BTC has performed exceptionally well this cycle!
Since the FTX bankruptcy in November 2022, Bitcoin's dominance (or its share of the total crypto market capitalization) has steadily risen from 40% two years ago to 60%, but when investors initially pieced together the impact of Donald Trump's election on November 6th, altcoins came to mind.
This is why you can expect Bitcoin to reign supreme under a Trump administration.
Bullish Fundamentals
While Donald Trump's clarity on the crypto-friendly policies he intends to pursue in his next presidential term is limited, we know the bullish fundamentals are as follows.
First, at the Bitcoin 2024 conference, Trump grandiosely promised to fire SEC Chairman Gary Gensler on the first day, vowed to make America the world capital of cryptocurrencies, and stated his intention to accumulate a national-level BTC reserve.
During the previous Trump administration, cryptocurrencies may have been marginalized, but Donald has since embraced the technology, launching his own Non-Fungible Token trading card series in December.
Most recently, Trump positioned himself in September as the founder of "World Liberty Financial", an upcoming (and yet-to-be-deployed) DeFi project, reportedly a deposit frontend for Aave, actively seeking investment from recognized U.S. financial institutions and uncensored international investors in exchange for non-transferable WLFI tokens.
Putting aside concerns about the policy details of how a Trump administration could/would benefit cryptocurrencies, given his family's substantial stake in WLFI, the next U.S. president has an undeniable economic incentive to enact or rescind regulations favorable to the industry.
While cryptocurrencies and blockchain applications have long been hampered by onerous financial regulations, many industry participants are optimistic about changes over the next four years, expecting the Trump administration to carve out various mandatory exemptions specifically for crypto projects.
Furthermore, with the Republicans having gained a majority in Congress, a unified government may enshrine such non-enforcement policies into legislation, extending their benefits far beyond Trump's term.
Altcoin Season
Assuming Trump keeps his campaign promises, the hostile relationship between U.S. regulators and the crypto industry will see a major thaw.
This easing could allow many different types of cryptocurrencies to gain ETF listings on national stock exchanges, and the increased availability of digital assets may compel people to purchase a wider variety of cryptocurrencies, not just BTC.
More temptingly, existing regulations prohibiting registered financial institutions (such as banks) from interacting with unlicensed blockchain technology may be rescinded. While many cryptocurrencies appear overvalued from a fundamental cash flow perspective, the industry's value depends on its growth prospects, and through proactive regulation, mass adoption may ultimately be realized.
As we approach Trump's inauguration, the anticipation of some vague policy changes in the future that could drive token demand or crypto usage will rationalize every token as a world-class purchase at any price.
If all nations, institutions, and individuals sue the U.S. and adopt BTC reserves under a Trump administration, we have reason to believe Bitcoin's market cap will soar to incredible heights.
But why stop there?
Will investors start emulating ETH - the second-largest cryptocurrency and a deflationary alternative to BTC - to power the existing broadest on-chain economy?
Won't the expected influx of retail not migrate to L2 assets like Base, or even those longer-tail assets with higher return prospects driven by perpetual bonds? Did I mention Base also has a token in this scenario?
When just a step away from the global casino table, what industry speculator wouldn't put a little cash into Elon Musk's perennial favorite meme coin, DOGE?
With the Trump administration's blind eye, cryptocurrencies appear poised for a blissful period reminiscent of the 2017 ICO frenzy, when BTC's dominance declined as unchecked optimism indiscriminately inflated everything to irrational prices.
