The cryptocurrency market has experienced a relatively large shock recently. Bitcoin once fell below $90,000, hitting its lowest point in nearly two months, and then quickly reversed in a V-shape. Driven by the positive inflation data in the United States, it rose again to above $100,000. With the imminent transfer of power by Trump, the violent fluctuations also indicate that the market has quietly begun to price in the opportunities and risks after his inauguration.
Crypto industry becomes an important funder of US election
The second round of Bitcoin price rise is related to Trump's association with the MAGA concept during the campaign. Trump said that "Bitcoin is a miracle of technology and human achievement, and proposed to give Bitcoin the same reserve currency status as the US dollar, maintain the country's strategic Bitcoin reserves, and make the United States the capital of cryptocurrency."
Trump showed strong support for the crypto industry during his campaign, which was reflected not only in his public remarks but also in the huge influx of funds. According to the Federal Election Commission (FEC), cryptocurrency-related political action committees (PACs) and other organizations supporting the industry raised more than $245 million in the 2024 presidential election, accounting for nearly half of corporate donations.
In addition, Trump has attracted young voters and technology supporters with cryptocurrency as the core concept. According to statistics, about 20% of adults in the United States hold crypto assets in 2023, and this group of people has shown high support for Trump's campaign. This resonance has won him a wider voter base and also made the price of Bitcoin hit new highs during the campaign.
Only if you hold cryptocurrencies will you develop crypto-friendly policies
As the first US president to openly support the crypto industry, Trump's crypto policy team has taken shape, with 25 cabinet members, many of whom are crypto-friendly and supportive of cryptocurrencies to varying degrees. For example, the vice president, secretary of the treasury, secretary of commerce, national security adviser, director of national intelligence, secretary of health and human services, secretary of government efficiency, and other key positions, such as the White House artificial intelligence and cryptocurrency affairs director and the new SEC chairman, are all held by people who support or hold cryptocurrencies.
In addition to relevant personnel appointments, Trump not only actively or passively holds crypto assets, but his business territory is also actively involved in the crypto field. From selling NFTs in the early years, to the current WLIF project, to applying to create crypto payment services on the social platform under his name, to the acquisition of Bakkt Exchange, Trump's involvement in the crypto industry has become deeper and deeper.
As a policy maker, only by actually holding cryptocurrencies can we formulate truly crypto-friendly policies and better coordinate the relationship between the government and the crypto industry. Trump's personnel and business layout in the field of cryptocurrency has boosted market confidence, and the market remains optimistic about his campaign slogans after taking office.
What measures will Trump introduce after taking office?
Trump officially took office as the US President on January 20. This is a definite signal that a series of reform measures will be introduced soon, especially for the emerging cryptocurrency industry. The market is full of expectations. The following are some prospects for Trump's crypto policy after he took office:
1. A series of friendly executive orders were issued on the first day of taking office
One of the most anticipated changes under the Trump administration is a more friendly crypto regulatory environment. According to The Washington Post, Trump is expected to issue executive orders on the first day of his presidency regarding debanking and the repeal of controversial cryptocurrency accounting policies that require banks holding digital assets to treat them as liabilities. It may also include the establishment of a cryptocurrency committee. These upcoming executive measures are committed to creating a supportive environment for the cryptocurrency industry.
2. SEC regulation is relaxed and more crypto ETFs are launched
Many of the cabinet members selected by Trump are crypto-friendly representatives. The new SEC chairman is also a supporter of cryptocurrencies. The market expects that after he takes office, he will review the previous chairman's multiple rules and court enforcement actions, and some of these cases may eventually be withdrawn. He will also take a more moderate attitude towards cryptocurrencies and create a more favorable regulatory environment. In addition, it is expected that more crypto ETFs will be launched this year, such as SOL and XRP, which are currently the most popular, to provide investors with more choices.
3. Clarify regulatory affiliation and reduce regulatory restrictions
The Republicans won a big victory in this election and hold a majority in both the House of Representatives and the Senate, so there is a high possibility that legislative barriers will be reduced. This political landscape may help to quickly pass bills aimed at clarifying the regulatory framework for digital assets, such as the 21st Century Financial Innovation and Technology Act.
The bill was proposed in 2023 to establish a regulatory framework for the digital asset market in the United States and provide clear rules for market participants. The current US cryptocurrency regulatory system is relatively chaotic. The IRS, the Securities and Exchange Commission, and the Commodity Futures Trading Commission all have different opinions, resulting in the question of whether cryptocurrencies are classified as securities or commodities being left unresolved. Clarifying the framework of rights and responsibilities and clarifying regulatory attribution is a top priority for the development of the industry. The bill is awaiting review and approval by the Senate, and Trump's inauguration may accelerate this process and provide much-needed regulatory clarity for cryptocurrency entrepreneurs.
In addition, Trump’s “America First” strategy should also be reflected in cryptocurrencies. For example, it may reduce regulatory restrictions on cryptocurrency transactions, lower market entry barriers, provide tax breaks or subsidies, attract technology research and development and talent to the United States, and make more cryptocurrencies “Made in the USA.”
4. Bitcoin strategic reserves are slowly advancing
The strategic reserve of Bitcoin is a topic of great concern in the market and is also the most exciting proposal in the crypto market. However, its implementation may face many legal and regulatory challenges. For example, whether the U.S. Treasury can increase its reserves by purchasing Bitcoin still needs the approval of Congress. At the same time, Federal Reserve Chairman Powell has previously publicly stated that the Federal Reserve has no intention of participating in the government's plan to hoard Bitcoin.
Despite this, Trump may still be able to bypass congressional approval by signing an executive order to promote the Bitcoin reserve plan, but this action carries greater administrative risks.
Although controversial, the U.S. Bitcoin reserve proposal reflects a bold vision. Currently, five states in the U.S. have taken the lead and put forward relevant proposals. Overall, the Bitcoin strategy may take longer to pass and implement, but it is expected to be actively promoted in 2025, such as completing policy research and formulating specific implementation details.
There may be a wave of market when power is transferred next week
January 20, the day of the transfer of power next Monday, is Martin Luther King Day. The U.S. stock market is closed, and the overflow of market sentiment is more likely to affect the crypto market. In addition, Trump's inauguration ceremony invited many well-known figures in the crypto industry. If he mentions Bitcoin and cryptocurrency in his speech, the market may have another wave of FOMO rise.
After his official inauguration, the opening ceremony of the emotion-driven "Trump rally" officially ended. From the campaign to being shot and then elected, the biggest benefits and expectations of the crypto industry were reflected in prices in advance. The subsequent long-term trend will depend on the actual policy implementation and market confidence.
At present, there are some new changes in the macroeconomic environment, and the crypto market is increasingly affected by this. The market is generally worried that Trump's tariff and immigration policies will lead to an upward trend in inflation. Some institutions even believe that the Federal Reserve may not cut interest rates throughout the year, and even does not rule out raising interest rates. Even if the interest rate cuts are made, the extent will be very limited. The obvious correction of US stocks in recent days is also a reflection of the market facing greater uncertainty. After the inauguration ceremony, in the absence of more positive factors in the short term, the market is likely to show a trend of sideways consolidation, low trading volume and reduced volatility.
Although macroeconomic factors put pressure on the crypto market, it is certain that Trump's official inauguration has brought new opportunities for the development of the crypto industry, especially in terms of the regulatory environment, promoting technological innovation and institutional mass adoption. In the next four years, we will witness profound changes in the cryptocurrency ecosystem in the United States and around the world. This is an exciting and challenging era for all industry players who are paying attention to this field.
