Author: Matt Hougan, Bitwise Chief Investment Officer; Compiler: 0xjs@黄金财经
There is no doubt: Crypto won the November 5 election.
Markets rose sharply on the news.
The Republican Party, which has written pro-crypto policies into its party platform, decisively won the presidential election, controlled the Senate, and seems likely to continue to control the House of Representatives. The Republican Party will take power in January next year and has strong power to fulfill its campaign promises to the cryptocurrency industry, including:
Changes in the leadership of the US SEC;
The end of "Operation Chokehold 2.0", which restricts the ability of cryptocurrencies to enter the traditional banking system;
Pro-crypto legislation on stablecoins, market structure, and more.
As I write this, Bitcoin is trading at an all-time high, and other crypto assets are also up sharply. In the short term, I don’t know if we will hold our highs or fall back. But in the medium to long term, I think we will go higher.
Specifically: I expect Bitcoin to approach $100,000 this year and $200,000 by 2025. Other crypto assets (which previously faced more regulatory risk) may perform even better.
I have never been more optimistic than I am right now. Below, I would like to share three key thoughts on the outlook for cryptocurrencies.
Thought 1: Cryptocurrency Unbundling – We Can Finally See What Crypto Can Do
For the past four years, Crypto has been operating on a tightrope.
It has faced numerous lawsuits from the US SEC and hostile actions from other regulators. Even basic rights, like access to banking services or the right to keep Bitcoin in an institutional setting, are restricted or threatened.
This hostile environment casts a huge shadow over the industry, hindering mainstream adoption and scaring off institutional investors. For TradFi, it’s one thing to invest in disruptive new technology, and another to invest in technology that is under constant regulatory threat.
Today, all that is gone, and in a momentous election, Washington will have a pro-crypto Congress and President.
I think lifting this veil will accelerate the development of crypto in all its facets. It will drive more institutional investment, spark widespread crypto adoption in the financial services industry, and accelerate innovation and mainstream adoption.
Crypto has long promised to change society in positive ways; now we have a chance to see it tried.
We are entering a golden age for crypto.
Thought 2: Remember the context – prices were already rising before the election
I am strongly bullish on cryptocurrencies regardless of the outcome of the November 5 election. The sector is currently facing multiple tailwinds, including:
Rapidly growing institutional demand: This is reflected in the massive inflows into Bitcoin ETFs (over $23 billion), 60% of the top 25 hedge funds holding Bitcoin, and blue chip institutions such as Emory University now disclosing new positions in cryptocurrencies. The benefits are staggering: Trillions of dollars of institutional assets currently have 0% exposure to cryptocurrencies; this was already starting to change before the results of November 5th were announced, and will accelerate from now on.
Limited Supply: We almost forget, but the April 2024 Bitcoin halving reduces the amount of new supply entering the market by billions of dollars per year. The limited supply will meet the increased demand in the coming months.
Debt, Deficits, and Rate Cuts: Unfortunately, the election didn’t change one thing: the US deficit is now $36 trillion and is increasing by $1 trillion every 100 days. The Congressional Budget Office projects that this will continue under Trump’s proposed policies; it may even get worse. Add to that the possibility of further Fed rate cuts and shaky economic conditions, and you have the perfect macro environment that makes Bitcoin a “must have” asset for investors.
Increasing Real Use Cases: To see the application of cryptocurrencies in everyday life, just look at the huge success of Polymarket, the prediction market that accurately predicted the outcome of this election. Also look at everything from stablecoins to gaming to decentralized finance. Cryptocurrencies are quickly becoming mainstream.
I could add more: Wall Street’s acceptance of cryptocurrencies; rapid improvements in blockchain technology; companies and governments allocating funds to cryptocurrencies. We were in a bull market before the election results on November 5; the election results will only accelerate that process.
Thought 3: Choices Matter
I’d like to end with a word of caution.
Today, the crypto market is booming and all assets are rising. There is a general expectation that the regulatory environment will be more supportive, which I think makes sense. This could mean more ETFs, more institutional adoption, and more growth.
But it’s worth remembering that not all crypto projects are good, and not all will succeed. All a regulatory reset does is put crypto on a fair and equal playing field, where it can succeed or fail on its own merits. It’s the investor’s responsibility to sift through the good stuff and take a rigorous approach to assessing risk. At Bitwise, we’ll continue to do our part.
As an industry, we have an exciting few years ahead. Congratulations to all the investors who took the plunge when cryptocurrencies were still unpopular. You were early adopters, seeing possibilities when others saw only risks. We thank you for joining us on this journey.
Brian
YouQuan
Joy
Hui Xin