US elections strengthen crypto markets
Following Trump's victory, the crypto market - led by bitcoin - has shown strong growth. Investors are hoping for tailwinds for the crypto market, partly founded on the many promises Trump made during his campaign. Will his promises make America the ultimate crypto nation? Let's discuss in this edition of Bitvavo Market News.
Market update
The crypto market has had a superb week. Bitcoin entered the U.S. election at a price of €63,000, but when it became clear that Trump had emerged victorious, the price leapt upwards. Trump has promised to break with the crypto-unfriendly policies of the current administration.
In just five days, Bitcoin's price sprinted to a new record of €76,200, up over 20%. This increase puts Bitcoin at an all-time high if you correct the price according to the 22% inflation we have recorded since November 2021.
The last eight months of stagnation followed the spectacular price increase between October 2023 and March 2024. BTC's price rose almost 200%, ETH's 150% and SOL's even 1000%. It is not surprising that the market needs some time to digest such a jump.
The chart below compares Bitcoin's price in the summer of 2023 with that of recent months. While the sideways period lasted a little longer this year and the correction was a little deeper, there are many similarities overall.
The optimism of recent days has been reflected not just in Bitcoin's price, but across the entire crypto market. It's not just the winners from earlier this year, such as SOL and memecoins; ETH and a range of DeFi coins have seen significant gains as well. ETH even made a 39% jump in one week. This new upward trend is still in its early stages, and it could be that the market is getting ahead of itself, but so far, things look promising.
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Trump's promises
America has spoken: Donald Trump will return to the White House, and this time with a clear mandate. He defeated Harris on every conceivable front, capturing the popular vote, the Senate and the House of Representatives, and even all of the swing states. His victory not only turns the political course of the U.S. upside down, but also offers a glimpse of a future in which crypto - and Bitcoin specifically - will finally have a permanent place in the country's financial architecture. From January 20th, Trump is back in charge, and that promises significant change.
Trump seems determined to transform America into the ultimate cryptonation. With bold promises and ambitious plans, he vowed to make Bitcoin a central part of his vision. In line with these promises, Gary Gensler, the SEC chairman who is widely disliked in the crypto world, will be shown the door. And that's just the beginning. Trump talked about creating a national bitcoin reserve, ending "Operation Choke Point 2.0" and protecting the right to self-custody. He also outlined the U.S. as a major player in bitcoin mining and aims to establish advisory bodies to represent the interests of the crypto sector.
In short, the man who once dismissed Bitcoin as “a scam against the dollar” now seems determined to turn the US into the crypto capital of the world.
It's not just Bitcoin that can count on his support, Trump also promised to release Ross Ulbricht, founder of the online black market Silk Road. He also spoke out against the creation and introduction of a digital dollar (CBDC). In doing so, Trump openly aligns himself as a patron of individual freedom and financial independence—two values that resonate deeply with the crypto community.
The influence of the crypto lobby in this election cannot be underestimated. Pro-crypto candidates secured seats in the House of Representatives and the Senate. One of the most notable victories was that of Bernie Moreno, who defeated Sherrod Brown with the support of the advocacy group. Brown, a key figure in Elizabeth Warren's "anti-crypto army" had to step aside. With more than 250 pro-crypto candidates in Congress and increasing pressure from the public, there seems to be a real foundation for policies that support the growth of this industry. The message was crystal clear: politicians who oppose crypto risk their political careers.
The question now is: does Trump truly understand what he's dealing with? His shift from rejecting to embracing Bitcoin naturally raises some doubts. Is he genuinely convinced of the power of this technology or is it just a convenient move to bolster his popularity with a growing group of crypto voters?
One thing is certain, however: the team around him understands the importance of Bitcoin. Among his advisors and congressmen are some of the most outspoken advocates of Bitcoin and decentralized applications. These people know the issues, understand the technical details, and see the potential to position America as a global leader.
For now, the market is responding positively. Last week, BlackRock's Bitcoin fund (IBIT) grew larger than its gold fund (IAU) in terms of assets under management. IBIT holds ~$34.5 billion at the time of writing, versus IAU's ~$33 billion. The main difference? The Bitcoin fund reached that value in just 10 months, while the gold fund took nearly 20 years.
In other news
- Altcoins are seeing strong performance with notable gains this week. Not only did Bitcoin rise sharply, but the riskier altcoin market was also very active. Ether rose 26%, Solana 27%, and Dogecoin 83%. DeFi tokens also did well, with Aave up 44% and Raydium as much as 67%. The flow of money into the alt market confirms there is a growing appetite for risk among investors. At Bitvavo, trading in Cardano rose remarkably last week, likely in response to statements from Cardano frontman Charles Hoskinson, which hint at possible involvement in policy-making under the next Trump administration.
- Michigan first state to invest in an Ethereum ETF. The Michigan pension fund has acquired $11.1 million in shares
- More and more DeFi protocols sharing revenue with token owners. Pressure to do so is largely driven by actively engaged investors. For example, Wintermute argued this week that Ethena should distribute revenue with sENA stakers. Meanwhile, Curve Finance announced that 10% of crvUSD revenues should be allocated to scrvUSD holders. Analysts cite the immediate benefits for token owners, but also caution that the potential returns could attract regulatory scrutiny.