The crypto community celebrates Donald Trump’s victory in the 2024 U.S. presidential election. Republicans have also secured control of both the Senate and the House. What does Trump's return to the White House mean for the crypto market?
"Make no mistake about it: Crypto won the election last night," — Matt Hougan, CIO at Bitwise.
Trump's victory might signal positive news for the U.S. digital asset sector, as he has repeatedly expressed support for crypto, branding himself a "pro-crypto candidate."
Trump has consistently promised to stop the "war on crypto" and make the U.S. the "crypto capital of the world." In a speech at a Bitcoin conference, he announced his plans to fire SEC Chair Gary Gensler and even create a strategic Bitcoin reserve. He has also heavily backed U.S. crypto miners, claiming he wants the U.S. to dominate global Bitcoin mining.
From the start of his campaign, Trump promised to ease regulations on digital assets and blockchain companies in the U.S., oppose a U.S. central bank digital currency, and support self-custody rights. Moreover, his family's new venture, World Liberty Financial, signals a stronger commitment to the crypto sector.
"Republicans will end Democrats' unlawful and unAmerican Crypto crackdown and oppose the creation of a Central Bank Digital Currency. We will defend the right to mine Bitcoin, and ensure every American has the right to self-custody of their Digital Assets, and transact free from Government Surveillance and Control." (The Republican Party platform 2024)
Key figures in the crypto world, including the founders of Gemini and Kraken, have backed Trump, donating millions to his campaign and viewing him as the sole pro-crypto candidate. Among those endorsing Trump's campaign are Charles Hoskinson, founder of Cardano; Mike Belshe, CEO of BitGo; Justin Sun, founder of Tron; and Charlie Shrem, founder of the Bitcoin Foundation.
A Trump victory opens a door to numerous government appointments, many of which are expected to be "pro-crypto," potentially having a great impact on crypto policies. With Republicans taking control of the US Senate, Elizabeth Warren might lose her key role on the Senate Banking Committee, potentially allowing for more pro-crypto legislation.
"Crypto has long promised that it can transform society in positive ways; now we get the chance to see it try. We are entering the Golden Age of Crypto." — Matt Hougan, CIO at Bitwise.
Markets reacted to Trump's win with a surge of rather predictable “Trump trades.” Bitcoin surged to new all-time highs above $75k. U.S. stocks rose by 2%. Treasury bonds dropped. The dollar gained strength.
All of this indicates that investors expect similar policies from a potential second Trump administration as from the first: tax cuts, deregulation, and trade barriers, leading to economic growth, increased corporate profits, higher inflation, and expanded government debt.
In bad news, protectionist policies will fuel inflation and budget deficits, consequently keeping interest rates high. Morgan Stanley predicts that investor risk appetite could decline as budget problems push up bond yields. However, such details can hardly worry anyone right now in the highly emotional and euphoric crypto market.
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