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Bitwise CIO Matthew Hougan mentioned in a Nov. 6 memo that Donald Trump’s victory in the US presidential elections will catalyze a “Golden Age of Crypto” as the brand new administration is ready to enhance the regulatory panorama.
Crypto markets rallied considerably as Trump’s odds of profitable the election climbed above 95% on prediction markets. Bitcoin (BTC) hit a brand new all-time excessive of roughly $75,650 after months of range-bound worth motion.
As of press time, the flagship crypto was buying and selling at $75,300, up 7.69% over the previous day, based mostly on StarCrypto knowledge.
Nonetheless, not all cryptocurrencies carried out equally over the previous 24 hours, with Hougan highlighting this disconnect to warn buyers to be “extra selective” with their investments.
Regulatory boundaries fall
In line with Hougan, the primary elementary change in a pro-crypto presidency time period could be a shift within the hostile strategy taken by the US Securities and Trade Fee (SEC) and different regulators towards the trade.
The Bitwise CIO mentioned:
“Crypto has been working for the previous 4 years with each fingers tied behind its again.”
For the previous few years, the SEC has taken a ‘regulation by enforcement’ strategy by making use of lawsuits to crypto corporations, often alleging unregistered securities distribution, with out disclosing what guidelines these firms violated.
Many have mentioned that the regulator’s strategy has stifled the trade’s progress. The criticism has been echoed internally, together with by Commissioner Hester Peirce, who instructed lawmakers throughout a listening to that the SEC’s strategy towards crypto has been a catastrophe.
In the meantime, Coinbase CLO Paul Grewal not too long ago revealed that the Federal Deposit Insurance coverage Company (FDIC) had instructed banks to abstain from providing crypto companies in over 20 incidents.
Hougan believes the brand new administration is anticipated to be supportive, given Trump’s pleasant remarks in direction of the crypto trade all through his marketing campaign. This variation in stance features a new management on the SEC and a possible finish to restrictive practices like Operation Choke Level 2.0.
Hougan believes the trade is primed for “larger institutional funding” and broader adoption if these shifts develop into concrete. The sector can now concentrate on innovation, unimpeded by regulatory hurdles, probably accelerating crypto’s mainstream integration.
Propelling costs
Regardless of the numerous worth leaps previously 24 hours, Hougan identified that crypto already displayed stable fundamentals. He cited sturdy institutional demand, with over $23 billion in inflows into Bitcoin exchange-traded funds (ETF) and rising curiosity from high hedge funds and blue-chip establishments.
Moreover, the April 2024 Bitcoin halving, alongside rising real-world use instances, reminiscent of stablecoins and the prediction market Polymarket, additionally offered a powerful basis for progress.
In the meantime, rising US debt and potential rate of interest cuts create a macroeconomic backdrop that might additional strengthen Bitcoin’s attraction as a “must-have” asset.
Nonetheless, a brand new pro-crypto authorities is a serious catalyst to additional enhance crypto costs.
Choosing good investments
Whereas optimism is widespread, Hougan cautioned towards a blanket strategy to crypto investing. He emphasised that almost all initiatives will wrestle to thrive regardless of a extra supportive atmosphere and will falter because the sector matures.
Hougan added that the regulatory reset will present a good taking part in subject for initiatives to succeed or fail on their deserves. He suggested buyers to take a disciplined strategy to distinguish promising initiatives from people who could underperform.
However, the Bitwise CIO mentioned the outlook is now brighter than ever for the early adopters who invested in crypto amid uncertainty.