Author: Socra, Jinse Finance
On November 6, Trump won the US election, which means that the Trump 2.0 era is about to begin. Benefiting from his friendly attitude towards the crypto industry, BTC has hit new highs multiple times and breached the $80,000 mark, while Altcoins have also seen a rare rally.
Due to the rapid upward momentum of the current crypto market, many investors are concerned that the current crypto market may be overheated. Investors who have already entered the market are also considering the market trend after Trump's victory, and even making investment plans for next year after Trump's formal inauguration. In this regard, Jinse Finance has sorted out the forecasts of various authoritative institutions on the future market and the possible positive and negative events.
I. Major events affecting the crypto market
Positive:
1. Inflow of spot Bitcoin ETFs
On November 6, the total trading volume of spot Bitcoin ETFs exceeded $6 billion, with BlackRock's spot Bitcoin ETF trading volume exceeding $4.1 billion, setting a new record.
On November 7, the BlackRock Bitcoin ETF saw an inflow of $1.1692 billion, the largest inflow since its launch. The top four daily inflows are: $1.1692 billion on November 7, $872 million on October 30, $849 million on March 12, and $788 million on March 5.
2. Interest rate cut cycle
On November 7, Eastern Time, the Federal Reserve announced after the FOMC monetary policy meeting that it would lower the target range for the federal funds rate from 4.75% to 5.0% to 4.5% to 4.75%, a 25 basis point (bp) reduction.
According to the CME "Fed Watch", the probability of a 25 basis point rate cut by the Fed in December is 71%. The probability of maintaining the current interest rate in January next year is 16.6%, the probability of a cumulative 25 basis point rate cut is 53%, and the probability of a cumulative 50 basis point rate cut is 30.4%.
JPMorgan expects the Federal Reserve to cut rates quarterly after the December policy meeting until the federal funds rate reaches 3.5%.
3. Favorable policies and regulatory relaxation
On November 6, the Republican Party gained control of the US Senate after securing key Senate seats in Ohio and West Virginia, meaning the Republican-controlled Senate is expected to be more supportive of cryptocurrencies, as they are likely to enact clearer cryptocurrency regulations.
CoinShares: Trump's biggest positive for cryptocurrencies will be the passage of a Bitcoin bill. Meanwhile, Wyoming Senator proposed the "Bitcoin Bill 2024", aiming to establish a strategic Bitcoin reserve and purchase 1 million Bitcoins within five years.
The Trump team is considering nominating Robinhood's Chief Legal and Compliance Officer Dan Gallagher as the next SEC chairman.
SEC crypto-friendly commissioner Hester Peirce is seen as a potential successor to the next SEC chairman.
Ethereum technology expert Vinay Gupta plans to push for crypto policies with the Trump transition team.
Bernstein: After Trump takes office, the SEC and the Senate Banking Committee are expected to take a more friendly attitude towards cryptocurrencies. Crypto assets are expected to be re-rated, as it is still unclear whether they qualify as securities.
In addition, stablecoin and market structure bills are likely to make faster progress, which is positive for stablecoin issuers like Circle and Paxos, as well as crypto exchanges and brokers/dealers in the US.
Coinbase's Chief Legal Officer: Hopes the SEC will stop prosecuting cryptocurrencies and start developing rules.
Bitwise Asset Management's CIO believes that the crypto industry has been shackled for years, but that should now come to an end. Investors are now starting to position themselves for crypto assets in the coming years.
Paradigm's Policy Research Head: A former Biden White House staffer said Democrats will no longer fight cryptocurrencies to the bitter end.
CCTV reported that the Bitcoin price hit a new high and said Trump had promised to establish a strategic Bitcoin reserve.
4. Financial environment
After Trump's victory, Wall Street institutions such as JPMorgan and Goldman Sachs are seeking potential US IPO opportunities for crypto companies, such as Kraken, Fireblocks and Chainalysis.
Matrixport's weekly report shows that Bitcoin adoption is approaching the critical 8% threshold, with about 7.51% of the global population (617 million people) using cryptocurrencies, close to the 8% adoption rate. Reaching this threshold may mark a turning point for Bitcoin's mainstream adoption.
Negative:
Powell: As we approach the neutral rate, it may be necessary to slow the pace of rate cuts.
Barclays says it expects the Federal Reserve to cut rates only twice, by 25 basis points each time, in 2025, down from its previous forecast of three rate cuts.
Orion Portfolio Solutions analyst: Since the first rate cut, long-term interest rates have been on a sharp upward trajectory and have started to decline after the announcement of the rate cut today. Against the backdrop of a strong US economy, the Fed's future path may be more complex than a steady pace of rate cuts.
II. Forecasts from various parties
Bullish:
Galaxy Research Head: Bitcoin has hit new highs multiple times this week, and from a fundamental perspective, the market does not appear overheated.
Galaxy CEO: Trump's victory could bring "hundreds of billions of dollars" to the crypto ecosystem.
Nansen analyst also expressed a similar view. "Bitcoin breaking its all-time high on high trading volume is a clear signal of the continued positive momentum after the election,"
JPMorgan: Bitcoin will continue to benefit from Trump's victory for about the next eight weeks, similar to the response in 2016. Trump has repeatedly stated that he will support the digital asset industry and raise tariffs, both of which could ultimately benefit Bitcoin.
QCP Capital: BTC has experienced a rebound in 3 election cycles, and the price has never fallen back to its previous performance. This bullish momentum is expected to remain strong by 2025.
Standard Chartered Bank: After Trump's victory, Bitcoin will reach $125,000 by the end of this year and $200,000 by the end of 2025. In terms of regulation, Trump is expected to overturn Biden's veto of SAB 121.
Coinbase CEO: From a policy perspective, cryptocurrencies will continue to exist until the industry is established in the US.
Bitwise CIO: We are entering the golden age of cryptocurrencies, and we will see a strong bull market in the coming years.
Copper Research Head: By January 20, 2025, when Trump takes office as president, Bitcoin's price is likely to reach $100,000. For Bitcoin, Trump witnessed two historical high cycles during his 2016-2020 presidency. Although these gains occurred against the backdrop of a weakening dollar, which is different from the current strong dollar environment. However, given that spot Bitcoin ETFs currently hold about 1.1 million Bitcoins, the momentum in the coming months may remain positive.
CNBC: Bitcoin price could reach $100,000 before the presidential inauguration.
Bernstein analyst: After Trump's victory, the headwinds for crypto regulation have turned into tailwinds. The new "crypto-friendly" SEC chairman and Senate Banking Committee are expected to accelerate regulatory transparency in the industry. The crypto industry is seeking new rules to define digital assets as assets other than securities, the applicability of broker-dealer laws to crypto exchanges and DeFi, accelerate the approval of investment products like ETFs, and allow banks to own and custody cryptocurrencies.
MakerDAO founder: Trump's victory will drive a true revival of DeFi, with the possibility of a 10-fold increase in user numbers, as DeFi benefits the most from the reduced regulatory uncertainty in the US compared to other aspects of the crypto space.
Bearish:
Orion Portfolio Solutions analyst: The future path of rate cuts may be more complex. The FOMC announced a 25 basis point rate cut in November as scheduled, indicating a less aggressive pace compared to September. It is noteworthy that since the first rate cut, long-term interest rates have been on a sharp upward trajectory and have started to decline after the announcement of the rate cut today. Against the backdrop of a strong US economy, the Fed's future path may be more complex than a steady pace of rate cuts.
Scotiabank: Businesses and markets have reason to be cautious about Trump 2.0. Protectionism will be an adverse factor for US and global economic growth. Fiscal stimulus on the overheated US economy will again trigger inflation risks and rising yields, further increasing the US fiscal deficit. Summary Based on the mainstream views of major institutions, the vast majority are optimistic about the future performance of the crypto market, and believe that a new bull market may be coming. In contrast, negative news and bearish views have become the "minority", with the logic of shorting mainly coming from the Federal Reserve's slowing rate cuts and the potential economic crisis caused by inflation, which may then affect the crypto market. However, in the current overall market situation, traders who choose to sell or short at this time may be suspected of going against the trend.
