Trump's inauguration is imminent, crypto is facing new changes. Can Bitcoin reach new heights?

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 pulled up a V-shaped reversal. Driven by the favorable US inflation data, it rose again to above $100,000. Trump's power transfer is imminent, and the violent fluctuations also indicate that the market has quietly begun to price in the opportunities and risks after he took office.

The encryption industry has become an important funder of the US election

The second round of Bitcoin price increases 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 national strategic Bitcoin reserves, and make the United States the capital of cryptocurrency."

Trump showed strong support for the crypto industry during the campaign, which was reflected not only in his public remarks but also in the influx of huge funds. According to the Federal Election Commission (FEC), in the 2024 presidential election, political action committees (PACs) related to the cryptocurrency industry and other organizations supporting the industry raised more than $245 million, accounting for nearly half of corporate donations.

In addition, Trump attracted young voters and technology supporters with cryptocurrency as the core concept. According to statistics, about 20% of adults in the United States held crypto assets in 2023, and this group showed high support for Trump's campaign. This resonance won him a wider voter base and also made Bitcoin prices hit new highs during the campaign.  

Only by holding cryptocurrencies can friendly crypto policies be formulated

As the first US president to openly support the crypto industry, Trump's crypto policy team has begun to take shape. Among the 25 cabinet members, many crypto-friendly people account for a large proportion and support cryptocurrencies to varying degrees. Such as the Vice President, Secretary of the Treasury, Secretary of Commerce, National Security Advisor, Director of National Intelligence, Secretary of Health and Human Services, Secretary of Government Efficiency, and other key positions, such as the White House Director of Artificial Intelligence and Cryptocurrency Affairs, 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 truly 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 have 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 President of the United States on January 20. This definite signal foreshadows a series of reform measures to be introduced, especially for the emerging cryptocurrency industry, and the market is full of expectations. Here are some prospects for Trump's crypto policy after taking office:

1. A series of friendly executive orders issued on the first day of taking office

One of the most anticipated changes in the Trump administration is a more friendly crypto regulatory environment. According to the Washington Post, Trump is expected to issue an executive order on the first day of his presidency, covering debanking and the abolition of the controversial cryptocurrency accounting policy, which requires 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 many rules and court enforcement actions of the previous chairman, and some of these cases may eventually be withdrawn. And he will 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 ownership and reduce regulatory restrictions

The Republicans won a landslide victory in this election and have 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. For example, 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. At present, the US cryptocurrency regulatory system is quite 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 unresolved. Clarifying the framework of rights and responsibilities and clarifying regulatory attribution are a top priority for the development of the industry. The bill is awaiting review and approval by the Senate. After Trump takes office, this process may be accelerated, providing much-needed regulatory clarity for cryptocurrency entrepreneurs. In addition, Trump's "America First" strategy should also be reflected in cryptocurrencies, such as reducing regulatory restrictions on cryptocurrency transactions, lowering market entry barriers, providing tax breaks or subsidies, attracting technology research and development and talent to flow into the United States, and making more cryptocurrencies "made in the United States."

4. Bitcoin strategic reserves are slowly advancing

Bitcoin strategic reserves are a topic of great concern in the market and the most exciting proposal in the crypto market. However, its implementation may face many legal and regulatory challenges. For example, whether the US Treasury can increase its reserves by purchasing Bitcoin still needs to be approved by 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 bypass congressional approval by signing an executive order to promote the Bitcoin reserve plan, but this action brings greater administrative risks.  

Although the US Bitcoin reserve proposal is controversial, it reflects a bold vision. At present, five states in the United States 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 US stock market is not open, 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 the official inauguration, the opening ceremony of the "Trump market" driven by emotions officially ended. From the campaign to the shooting and then to the election, the biggest benefits and expectations of the crypto industry have been reflected in the price in advance. The subsequent long-term trend depends on the actual policy implementation and market confidence.

At present, there have been some new changes in the macroeconomic environment, and the crypto market is increasingly affected by this. The market is generally worried that Trump's tariffs and immigration policies will cause inflation to rise. Some institutions even believe that the Federal Reserve may not cut interest rates throughout this year or even rule out raising interest rates, and even if the rate cuts are, the extent will be very limited. The significant correction of U.S. stocks in recent days is also a reflection of the market facing greater uncertainty. After the inauguration, 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 large-scale institutional adoption, which is very exciting. 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.

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