Author: Socra, Golden Finance
On November 6th, Trump won the US presidential election, returning to the White House, which means the beginning of the Trump 2.0 era. Benefiting from his friendly attitude towards the crypto industry, BTC has repeatedly hit historical highs and approached the $0.08 million mark, while altcoins have seen a long-awaited uptrend.
Due to the sharp rise in the crypto market this time, many investors are concerned about whether the current market is overheated. Investors who have already joined are also considering the market trend after Trump's victory, and even making investment plans for next year when Trump officially takes office. In response, Golden Finance has compiled recent forecasts and potential bullish and bearish events from various authoritative institutions.
1. Major events affecting the crypto market
Bullish:
1. Inflow of spot bitcoin ETF
On November 6th, the total trading volume of spot bitcoin ETF exceeded $6 billion, with Blackrock's spot bitcoin ETF trading volume surpassing $4.1 billion, reaching a historical high.
On November 7th, Blackrock's bitcoin ETF saw an inflow of $1.11692 billion, the largest fund inflow since its launch. The top four daily inflows were: November 7th with $1.11692 billion inflow; October 30th with $0.872 billion inflow; March 12th with $0.849 billion inflow; March 5th with $0.788 billion inflow.
Rate cut cycle
On November 7th, Eastern Time, the Federal Reserve announced after the FOMC meeting that it will 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 'FedWatch', the probability of a 25 basis point rate cut by the Federal Reserve in December is 71%. The probability of maintaining the current rate until January next year is 16.6%, the cumulative probability of a 25 basis point cut is 53%, and the cumulative probability of a 50 basis point 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%.
Positive policy direction and regulatory easing
On November 6th, the Republican Party gained majority control of the US Senate after securing key seats in Ohio and West Virginia, meaning the GOP now has a majority in the US Senate. This could imply stronger support for cryptos in the US Congress, as the Republican-led Senate is expected to introduce clearer crypto regulations.
CoinShares: The biggest bullish for cryptocurrencies from Trump would be through a Bitcoin bill. Meanwhile, a Wyoming senator proposed the '2024 Bitcoin Bill' aimed at establishing a strategic Bitcoin reserve, intending to purchase 1 million bitcoins within five years.
The Trump team is considering naming Dan Gallagher, Chief Legal and Compliance Officer of Robinhood, as a candidate for the chairman of the US Securities and Exchange Commission.
Hester Peirce, the cryptos-friendly commissioner at the SEC, is considered a potential successor to the next chairman.
Vinay Gupta, an ethereum technical expert, plans to advocate for crypto policies to the Trump transition team.
Bernstein: It is expected that the SEC and the Senate Banking Committee in the usa will take a friendly attitude towards cryptos after Trump takes office. It is expected that crypto assets will be re-evaluated, as it is not yet clear whether these assets qualify as securities.
In addition, stablecoins and market structure bills are expected to make faster progress, which is bullish for stablecoin issuers like Circle and Paxos, as well as for usa crypto exchanges and broker/dealers.
Coinbase's Chief Legal Officer expressed hope that the SEC will stop prosecuting cryptos and start formulating rules.
The investment director of Bitwise Asset Management believes that the entire crypto industry has been like a bound hand and foot for years, but it should come to an end now. Investors have now begun to accumulate positions in crypto assets for the next few years.
Policy director at Paradigm: Former White House officials under Biden's administration indicated that Democrats will no longer fight cryptocurrencies to the end.
CCTV reported that the price of bitcoin broke a new high and claimed that Trump had promised to establish a bitcoin strategic reserve.
4. Financial Environment
After Trump's election victory, institutions such as jpmorgan and Goldman Sachs on Wall Street are seeking potential opportunities for US stock IPOs of crypto companies like Kraken, Fireblocks, and Chainalysis.
Matrixport's weekly report shows that the adoption rate of Bitcoin is approaching the crucial 8% threshold, with approximately 7.51% of the global population (0.617 billion people) using cryptos, nearing the 8% adoption rate. Reaching this threshold may signify a turning point for Bitcoin towards mainstream applications.
Bearish:
Powell: As neutral interest rates approach, it may be necessary to slow down the pace of rate cuts.
Barclays stated that it is expected the Fed will only cut rates twice in 2025, by 25 basis points each time, previously predicted as three cuts. It is expected that the Bank of England will keep rates unchanged at the December meeting, instead of cutting rates as previously predicted.
Analyst at Orion Portfolio Solutions Company: Since the first rate cut, long-term rates have been on a sharp upward trajectory and began to decline after today's rate cut announcement. With the backdrop of a strong US economy, the path ahead for the Fed may be more complex than just steadily cutting rates.
II. Predictions from Various Parties
Bullish:
Galaxy's research director: Bitcoin has repeatedly hit historical highs 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 analyst also expressed a similar view. "Bitcoin breaking historical highs under high trading volume is a clear signal of continued positive momentum after the election."
JPMorgan: Bitcoin is expected to continue benefiting from Trump's victory in the next eight weeks. Trump's victory is expected to generate a reaction similar to 2016 in the next eight weeks. Trump has repeatedly stated that he will support the digital asset industry and increase tariffs, both of which may ultimately benefit Bitcoin.
QCP Capital: BTC has experienced three election cycles, all showing a rebound trend and the price has never fallen back to previous levels. It is expected that by 2025, this bullish momentum will remain strong.
Standard Chartered Bank: Bitcoin is expected to reach $0.125 million by the end of this year after Trump's victory, and by the end of 2025, it will reach $200,000. In terms of regulation, it is expected that Trump will overturn Biden's veto of SAB 121.
Coinbase CEO: From a policy perspective, cryptos will continue to exist until the industry is established in the U.S.
Bitwise Chief Investment Officer: We are entering the golden age of cryptos and we will see a strong bull market in the coming years.
Copper Research Director: By January 20, 2025, when Trump takes office as president, the price of bitcoin is likely to reach 0.1 million USD. For bitcoin, Trump witnessed two historic high cycles during his presidency from 2016-2020. Although these gains occurred against a backdrop of a weakening USD, unlike the current environment of a strong USD. However, given that bitcoin spot ETF currently holds about 1.1 million bitcoins, the momentum for the next few months may remain positive.
CNBC: The price of bitcoin may reach 0.1 million USD before the presidential inauguration.
Bernstein Analyst: After Trump's victory, the headwinds in crypto regulation have turned into tailwinds. It is expected that the new "crypto-friendly" Chairman of the U.S. Securities and Exchange Commission and the Senate Banking Committee will accelerate regulatory transparency in the industry. The crypto sector is seeking new rules to define digital assets as assets other than securities, the applicability of broker laws to crypto exchanges and DeFi, speeding up the approval of investment products such as ETFs, and allowing banks to own and custody cryptos.
MakerDAO Founder: Trump's victory will drive a true resurgence of DeFi, greatly increasing the possibility of a 10-fold increase in the number of users, as compared to other aspects of the crypto space, DeFi benefits the most from reduced regulatory uncertainty in the United States.
Bearish:
Orion Investment Portfolio Solutions Analyst: The path to future rate cuts may be more complex. The FOMC announced a 25 basis point rate cut in November, marking a reduced level of aggressiveness compared to the rate cut in September. It is noteworthy that since the first rate cut, long-term rates have been in a sharp upward trend and started declining after today's rate cut announcement. Against the backdrop of a strong U.S. economy, the Fed may face a more complex path ahead than a steady rate cut.
Bank of Nova Scotia: Businesses and markets have reasons to be cautious about Trump 2.0. Protectionism will become a negative factor for U.S. and global economic growth. Implementing fiscal stimulus for the demand-overloaded U.S. economy will again raise inflation risks and yields, further increasing the U.S. fiscal deficit.
Summary
According to the current mainstream views of major institutions, the vast majority are optimistic about the future market of the crypto market, and believe that a new bull market may be on the horizon. On the other hand, bearish events and sentiments have become the 'minority', with the bearish logic mainly stemming from the Fed's easing of interest rates and the potential economic crisis brought about by inflation, which could potentially affect the crypto market. However, based on the current overall market conditions, it seems that traders choosing to sell or go short at this stage may be suspected of going against the trend.
