Author: Matt Hougan, Chief Investment Officer of Bitwise; Compiled by 0xjs@Jinse Finance
There is no doubt: Crypto won the election on November 5th.
The market has surged in response to this news.
The Republican Party has written pro-crypto policies into its platform, and it has decisively won the presidential election, controlled the Senate, and appears poised to continue controlling the House. The Republicans will take office in January 2023 and have the power to fulfill their campaign promises to the crypto industry, including:
Changes in the leadership of the U.S. SEC;
The end of "Operation Choke Point 2.0", which restricted crypto's ability to access the traditional banking system;
Supportive crypto legislation on stablecoins, market structure, etc.
As I write this, the Bit price has hit a new all-time high, and other crypto assets have also surged significantly. In the short term, I don't know whether we will hold these highs or pull back. But in the medium to long term, I believe we will go higher.
Specifically: I expect Bit to approach $100,000 this year and $200,000 by 2025. Other crypto assets (which previously faced more regulatory risks) may perform even better.
I have never been more optimistic than I am now. Below, I want to share three key thoughts on the outlook for crypto.
Thought 1: Crypto Deregulation - We Can Finally See What Crypto Can Do
For the past four years, Crypto has been operating in a straitjacket.
It has faced countless lawsuits from the U.S. SEC and other hostile regulatory actions. Even basic rights (such as access to banking services or the ability to custody Bit in institutional environments) have been restricted or threatened.
This hostile environment has cast a huge shadow over the entire industry, hindering mainstream adoption and scaring off institutional investors. For TradFi companies, investing in disruptive new technologies is one thing, but investing in technologies under constant regulatory threat is another.
Now, all of this is gone, and in a pivotal election, Washington will see a crypto-friendly Congress and President.
I believe lifting this veil will accelerate crypto's development in all areas. It will drive more institutional investment, spur widespread financial services adoption of crypto technology, and accelerate innovation and mainstream applications.
Crypto has long promised to positively transform society; now we have a chance to see it try.
We are entering the golden age of crypto.
Thought 2: Remember the Context - Prices Were Already Rising Before the Election
Regardless of the election results on November 5th, I am strongly bullish on crypto. The industry currently faces multiple tailwinds, including:
Rapidly growing institutional demand: evidenced by the massive inflows into Bit ETFs (over $23 billion), 60% of the top 25 hedge funds holding Bit, and blue-chip institutions like Emory University now disclosing new crypto positions. The upside is staggering: there are currently trillions of dollars in institutional assets with 0% exposure to crypto; this has already started to change before the November 5th results, and will accelerate from here.
Limited supply: We've almost forgotten, but the Bit halving in April 2024 will reduce the annual new supply entering the market by billions of dollars. The limited supply will meet the increased demand in the coming months.
Debt, deficits, and rate cuts: Unfortunately, the election did not change one thing: the U.S. deficit is now $36 trillion and growing by $1 trillion every 100 days. The Congressional Budget Office projects this will continue under Trump's proposed policies; it may even get worse. Add in the potential for further Fed rate cuts and economic instability, and you have a perfect macro environment for Bit to become a "must-have" asset for investors.
Rapidly increasing real-world use cases: To see crypto's applications in everyday life, just look at the huge success of Polymarket, the prediction market that accurately forecast this election's results. Or look at the various areas from stablecoins to gaming to DeFi. Crypto is rapidly going mainstream.
I could add more: Wall Street's embrace of crypto; the rapid improvements in Block technology; companies and governments allocating funds to crypto. We were in a bull market before the November 5th election results; the results will only accelerate this process.
Thought 3: Selection Matters
Finally, I want to offer a note of caution.
Today, the crypto market is booming, with all assets rising. There is a general expectation that a more supportive regulatory environment is coming, and I think this is reasonable. This could mean more ETFs, more institutional adoption, and more growth.
But it's worth remembering that not all crypto projects are good, and not all projects will succeed. All the regulatory reset does is put crypto on a level, fair playing field where it can succeed or fail on its own merits. Investors have a responsibility to sift through and find the good stuff, and to take a rigorous approach to evaluating risk. At Bitwise, we'll continue to do our part.
As an industry, the next few years will be full of excitement. Congratulations to all the investors who took a risk on crypto before it was mainstream. You are the early adopters, seeing the possibilities when others only saw the risks. We thank you for joining us on this journey.
