Author: Socra, Golden Finance
On November 6, Trump won the US election and returned to the White House, which means that the Trump 2.0 era is about to begin. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly set new historical highs and hit the $80,000 mark, and altcoins have ushered in a long-awaited rise.
As the crypto market is rising rapidly, many investors are worried whether the current crypto market is overheated. Investors who have already invested are also considering the market trend after Trump's victory, and are even making investment plans for Trump's official inauguration next year. In this regard, Golden Finance has sorted out the recent forecasts of various authoritative institutions on the future market and possible positive and negative events.
1. Major events that impacted the crypto market
Pros:
1. Spot Bitcoin ETF Inflows
On November 6, the total trading volume of spot Bitcoin ETFs exceeded US$6 billion, and BlackRock's spot Bitcoin ETF trading volume exceeded US$4.1 billion, setting a record high.
On November 7, BlackRock Bitcoin ETF received $1.11692 billion in inflows, the largest inflow since its launch. The top four daily inflows were: $1.11692 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 meeting of the Monetary Policy Committee that it would lower the target range of the federal funds rate from 4.75% to 5.0% to 4.5% to 4.75%, a decrease of 25 basis points (bp).
According to CME's "Fed Watch", the probability of the Fed cutting interest rates by 25 basis points in December is 71%. The probability of maintaining the current interest rate unchanged by January next year is 16.6%, the probability of a cumulative rate cut of 25 basis points is 53%, and the probability of a cumulative rate cut of 50 basis points is 30.4%.
JPMorgan Chase & Co. expects the Fed to cut interest rates quarterly after its December policy meeting until the federal funds rate reaches 3.5%.
3. Policies are improving and regulations are being relaxed
On November 6, the Republican Party of the United States took control after securing key Senate seats in Ohio and West Virginia, which means that the Republican Party has gained majority control of the U.S. Senate. This may mean that the U.S. Congress will be more supportive of cryptocurrencies, as the Republican-led Senate is expected to prepare clearer cryptocurrency regulations.
CoinShares: Trump's biggest benefit to cryptocurrency will be the passage of the Bitcoin Act. At the same time, Wyoming senators proposed the Bitcoin Act of 2024, which aims to establish a strategic Bitcoin reserve and purchase 1 million Bitcoins within five years.
The Trump team is considering Robinhood Chief Legal and Compliance Officer Dan Gallagher as a candidate for Chairman of the U.S. Securities and Exchange Commission.
Hester Peirce, a crypto-friendly commissioner at the U.S. SEC, is considered a potential successor to the next chairman.
Ethereum technologist Vinay Gupta plans to promote crypto policy to the Trump transition team.
Bernstein: The US SEC and Senate Banking Committee are expected to take a friendly attitude towards cryptocurrencies after Trump takes office. Crypto assets are expected to be re-rated because it is unclear whether these assets qualify as securities.
Additionally, both stablecoin and market structure bills are likely to make faster progress, which is good news for stablecoin issuers such as Circle and Paxos, as well as U.S.-based cryptocurrency exchanges and broker/dealers.
Coinbase Chief Legal Officer: I hope the SEC will stop prosecuting cryptocurrencies and start making rules.
The investment director of Bitwise Asset Management believes that the entire cryptocurrency industry has been operating with its hands and feet tied for many years, but this should come to an end now. Investors are now starting to build positions for crypto assets for the next few years.
Paradigm policy research director: Former Biden White House staff said Democrats will no longer fight cryptocurrencies to the end.
CCTV reported that the price of Bitcoin hit a new high and said that Trump had promised to establish a strategic reserve of Bitcoin.
4. Financial environment
After Trump's victory, Wall Street institutions such as JPMorgan Chase and Goldman Sachs sought potential opportunities for US IPOs of crypto companies such as Kraken, Fireblocks and Chainalysis.
Matrixport's weekly report shows that Bitcoin's penetration rate is close to the critical 8% threshold, with about 7.51% of the world's population (617 million people) using cryptocurrencies, close to an 8% penetration rate. Reaching this threshold may mark a turning point for Bitcoin to move toward mainstream application.
Negative:
Powell: As we approach the neutral interest rate, it may be necessary to slow the pace of rate cuts.
Barclays said it expects the Fed to cut rates just twice, by 25 basis points each, in 2025, compared with three cuts previously forecast. The Bank of England is expected to keep interest rates unchanged at its December meeting, compared with a previous forecast of a rate cut.
Analyst at Orion Portfolio Solutions: Long-term interest rates have been on a sharp upward trajectory since the first rate cut and began to decline after the rate cut was announced today. Against the backdrop of a strong U.S. economy, the path ahead for the Fed may be more complicated than steady rate cuts.
2. Predictions from all parties
Bullish:
Galaxy Research Director: Bitcoin hit new all-time highs several times this week. From a fundamental perspective, the market does not appear overheated.
Galaxy CEO: Trump's victory may bring "hundreds of billions of dollars" to the crypto ecosystem.
Nansen analysts expressed a similar view: “Bitcoin’s breakout above all-time highs on high volume is a clear sign of continued positive post-election momentum.”
JPMorgan Chase: Bitcoin will continue to benefit from Trump's victory in the next eight weeks or so, and Trump's victory will have similar repercussions in the next eight weeks or so as in 2016. Trump has repeatedly stated that he will support the digital asset industry and increase tariffs, both of which may ultimately help Bitcoin.
QCP Capital: BTC has experienced three election cycles, all of which have shown a rebound trend and the price has never fallen back to its previous performance. It is expected that this bull market momentum will remain strong in 2025.
Standard Chartered Bank: Bitcoin will reach $125,000 by the end of this year after Trump wins the election, and will reach $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 United States.
Bitwise Chief Investment Officer: We are entering the golden age of cryptocurrency and we will see a strong bull market in the next few years.
Copper Research Director: By January 20, 2025, when Trump takes office as president, the price of Bitcoin is likely to reach $100,000. For Bitcoin, Trump witnessed two historical high cycles during his presidency from 2016 to 2020. Although these gains occurred against the backdrop of a weaker dollar, which is different from today's strong dollar environment. However, given that Bitcoin spot ETFs currently hold about 1.1 million Bitcoins, momentum is likely to remain positive in the coming months. "
CNBC: Bitcoin price could reach $100,000 before presidential inauguration.
Bernstein analyst: After Trump's victory, the headwinds of crypto regulation have turned into tailwinds. It is expected that the new "crypto-friendly" SEC chairman and Senate Banking Committee will 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 laws to crypto exchanges and DeFi, accelerate the approval of investment products such as ETFs, and allow banks to own and custody cryptocurrencies.
MakerDAO founder: Trump's victory will drive a truly sustained revival of DeFi, and the possibility of a 10-fold increase in the number of users will greatly increase, because compared with other aspects of the crypto field, DeFi benefits the most from the reduced uncertainty of US regulation.
Bearish:
Analysts at Orion Portfolio Solutions: The path to future rate cuts may be more complicated. The FOMC announced a 25 basis point rate cut as expected in November, marking a reduction in their aggressiveness relative to the September rate cut. It is worth noting that long-term interest rates have been on a sharp upward trajectory since the first rate cut and began to decline after the rate cut was announced today. Against the backdrop of a strong US economy, the path ahead for the Fed may be more complicated than steady rate cuts.
Scotiabank: Companies and markets have reason to be cautious about Trump 2.0. Protectionism will become a negative factor for US and global economic growth. Fiscal stimulus for the US economy with excess demand will once again trigger inflation risks and rising yields, and further increase the US fiscal deficit.
summary
Judging from the mainstream views of major institutions, the vast majority are optimistic about the future of the crypto market and believe that a new bull market may be coming. On the other hand, negative events and bearish comments have become a "minority". The bearish logic mainly comes from the economic crisis that may be brought about by the slowdown in interest rate cuts by the Federal Reserve and inflation, which may then affect the crypto market. However, judging from the overall market conditions at this stage, it is obvious that traders who choose to sell or short at this time are suspected of going against the trend.
