Trump election win set to kick off ‘golden age of crypto’ in the US – Bitwise CIO

The new administration can prompt more transparent rules and boost in crypto prices, while also motivating investors to be more selective.

Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.

Bitwise CIO Matthew Hougan said in a Nov. 6 memo that Donald Trump’s victory in the US presidential elections will catalyze a “Golden Age of Crypto” as the new administration is set to improve the regulatory landscape.

Crypto markets rallied significantly as Trump’s odds of winning the election climbed above 95% on prediction markets. Bitcoin (BTC) hit a new all-time high of roughly $75,650 after months of range-bound price action.

As of press time, the flagship crypto was trading at $75,300, up 7.69% over the past day, based on CryptoSlate data.

However, not all cryptocurrencies performed equally over the past 24 hours, with Hougan highlighting this disconnect to warn investors to be “more selective” with their investments.

Regulatory barriers fall

According to Hougan, the first fundamental change in a pro-crypto presidency term would be a shift in the hostile approach taken by the US Securities and Exchange Commission (SEC) and other regulators toward the industry.

The Bitwise CIO said:

“Crypto has been operating for the past four years with both hands tied behind its back.”

For the past few years, the SEC has taken a ‘regulation by enforcement’ approach by applying lawsuits to crypto firms, usually alleging unregistered securities distribution, without disclosing what rules these companies violated.

Many have said that the regulator’s approach has stifled the industry’s growth. The criticism has been echoed internally, including by Commissioner Hester Peirce, who told lawmakers during a hearing that the SEC’s approach toward crypto has been a disaster.

Meanwhile, Coinbase CLO Paul Grewal recently revealed that the Federal Deposit Insurance Corporation (FDIC) had instructed banks to abstain from offering crypto services in over 20 incidents.

Hougan believes the new administration is expected to be supportive, given Trump’s friendly remarks towards the crypto industry throughout his campaign. This change in stance includes a new leadership at the SEC and a potential end to restrictive practices like Operation Choke Point 2.0. 

Hougan believes the industry is primed for “greater institutional investment” and broader adoption if these shifts become concrete. The sector can now focus on innovation, unimpeded by regulatory hurdles, potentially accelerating crypto’s mainstream integration.

Propelling prices

Despite the significant price leaps in the past 24 hours, Hougan pointed out that crypto already displayed solid fundamentals. He cited robust institutional demand, with over $23 billion in inflows into Bitcoin exchange-traded funds (ETF) and growing interest from top hedge funds and blue-chip institutions. 

Additionally, the April 2024 Bitcoin halving, alongside growing real-world use cases, such as stablecoins and the prediction market Polymarket, also provided a strong foundation for growth. 

Meanwhile, rising US debt and potential interest rate cuts create a macroeconomic backdrop that could further strengthen Bitcoin’s appeal as a “must-have” asset. 

Still, a new pro-crypto government is a major catalyst to further boost crypto prices.

Selecting good investments

While optimism is widespread, Hougan cautioned against a blanket approach to crypto investing. He emphasized that most projects will struggle to thrive despite a more supportive environment and may falter as the sector matures. 

Hougan added that the regulatory reset will provide an even playing field for projects to succeed or fail on their merits. He advised investors to take a disciplined approach to differentiate promising projects from those that may underperform. 

Nevertheless, the Bitwise CIO said the outlook is now brighter than ever for the early adopters who invested in crypto amid uncertainty.

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