In Markets
Crypto markets are euphoric following pro-crypto candidate Donald Trump’s US election victory and the promise of a fresh start for the industry. Bitcoin has surged to a new inflation-adjusted all-time high and keeps going up. At the time of writing, it had gained 19.4% on a week ago to trade at A$135,190 (US$89,328). Analyst James Check said Bitcoin has entered the “euphoria zone by convincingly breaking through the previous cycle’s ATH.” Ethereum gained 40% this week to trade around A$5,115 (US$3,346). It’s expected to benefit considerably from the new administration, as many of the most interesting and useful financial use cases on ETH have been under a regulatory cloud for years. Solana also gained 40% and is only the fourth cryptocurrency to top an A$152B/US$100B market cap, XRP gained 22%, while Cardano surged 86% after founder Charles Hoskinson talked up his influence in Washington. Dogecoin gained 109%, as Elon Musk’s Department of Government Efficiency (DOGE) looks like it is becoming a reality, and fellow dog coin Shiba Inu gained 62%. The Crypto Fear and Greed Index is at 76, or Extreme Greed.
From the IR OTC Desk
Over the past week, financial markets have experienced significant movements, largely influenced by the recent U.S. presidential election. The re-election of Donald Trump has been a pivotal factor, leading to notable shifts across various asset classes.
We also saw the back of the last decision by the FOMC – as expected the US cash rate was reduced by 25bps. This coincided very nicely with the election results which we charted as the states made a turn to the red.
BTC-USD, 15-minute candles
Traditional financial markets mirrored this enthusiasm. U.S. equity indices, including the S&P 500 and Dow Jones Industrial Average, experienced gains, driven by expectations of pro-business policies and potential tax reforms. The U.S. dollar strengthened, with the dollar index rising by more than 2%, reflecting investor confidence in the economic outlook.
All eyes, of course, have been on the cryptocurrency complex, as we’ve basically been in “up-only” mode since Saturday, with Bitcoin up 16%, ETH 7%, SOL 11%, and DOGE up a whopping 53%, all in just 2 days!
“Where does it stop?” is the next question on everyone’s lips, and while we can’t offer any wisdom there, it does seem like there is not much in terms of headwinds for the next few months. One interesting dynamic we’ve been discussing has been Ethereum – where does it go from here? On one hand, it would appear that the old “regulation by enforcement” rut that we’ve been stuck in might soon be over, giving investors much more confidence in the future of DeFi. ETH also famously plays catchup after Bitcoin appreciates, and fees are 10x higher at the moment than they have been for a while, which is a decent proxy for on-chain activity. On the other hand, however, the ETF moat suddenly looks very shallow, with a possible change in leadership at the SEC, and an extremely crypto-friendly administration in the wings. Solana has long been nipping at Ethereum’s heels: if a Solana ETF is realised, will it perform better than the (so far lacklustre) ETH ETF?
Either way, everything goes up for the moment.
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Why is Trump good for crypto?
Surveys suggest Trump is pretty unpopular in Australia, but for crypto holders, he’s set to be the industry’s saviour. He’s committed to a Bitcoin stockpile, which may involve not selling the government’s confiscated Silk Road Bitcoin. However, Republican Senator Cynthia Lummis is pushing legislation for a Strategic Bitcoin Reserve which would see the country acquire 1 million Bitcoin. SEC boss and crypto industry supervillain, Gary Gensler, is reportedly set to quit before the year’s end, as Trump promised to remove him on day one. Trump has also pledged to end Operation Choke Point 2.0, which crippled the ability of US banks to deal with crypto, and establish a Presidential Advisory Council on crypto regulations. Trump wants the US to dominate Bitcoin mining, and he’s promised to pardon Silk Road creator Ross Ulbricht. Depending on who becomes SEC chair, staking looks more likely to be added to the Ethereum ETFs, and altcoin ETFs (XRP or Solana) may get approved.
Bitcoin ETFs go crazy
The Bitcoin ETFs have ramped up to heroic levels of inflows. Last week, we noted there was speculation that Black Rock’s IBIT may soon see a billion-dollar inflow day, and this week, the prophecy came true with US$1.12 billion (A$1.7B) inflows the day after the election. It now has US$33 billion (A$50B) AUM, meaning that in less than a year, Black Rock’s Bitcoin ETF surpassed its gold ETF, which launched in 2005. All up, the Bitcoin ETFs took in US$1.631 billion (A$2.47B) last week, which may be one reason that markets barely blinked with Mt Gox shuffled around US$2.4B (A$3.6B) of Bitcoin. The Ethereum ETFs also (finally) roared to life, taking in US$154.7 million (A$235M) weekly inflows.
Polymarket prediction market vindicated
Crypto-based prediction markets vastly outperformed traditional polling this election, with Polymarket not only calling the winner months ago but also getting every state right. Hours before AP was willing to call the election, the market had resolved to 99% favouring Trump. “Make no mistake, Polymarket single-handedly called the election before anything else,” said founder and CEO Shayne Coplan. That French gambler who cleaned up with US$48M (A$73M) in profits revealed that he’d based the huge bet on ‘neighbour polls‘ showing a big swing to Trump. That’s where pollsters ask people who they think their neighbour will vote for rather than who they will vote for. However, the French regulators look set to ban Polymarket. The platform this week hinted it may soon release a token.
Price predictions get bullish
It’s safe to say that most people in crypto are pretty bullish now that the war on crypto is over. Galaxy Digital CEO Mike Novogratz, who is presenting at a conference in Adelaide this week, said, “it’s the most important thing that’s happened to my business, Galaxy, and the cryptocurrency industry in four years.” He tipped Bitcoin will top US$100K (A$152K) by the end of the year. Meanwhile, Standard Chartered released a note after the election saying the overall crypto market cap was set to quadruple to US$10 trillion (A$15.2T) by the end of 2026. “We expect the coming two-year period to see similar price gains for digital assets (in percentage terms) to 2021,” the bank said. “As in 2021, existing digital assets are likely to see price rises and new subsectors emerge; this time, real-world use cases are finally poised to go mainstream.” Its price target for Bitcoin is US$200K (A$304K), and for Ethereum, it will be US$10K ($15.2K) by the end of 2025. However, CryptoQuant CEO Ki Young Ju cited an overheated futures market for his end-of-year Bitcoin price prediction of US$58,974 (A$89,733).
It was crypto that won it
The crypto industry’s campaign was a significant factor in this election, spending US$169 million (A$257M) on campaigning for pro-crypto candidates. The Wall Street Journal reported it was money well spent, with 54 of the 58 candidates supported by crypto super PACs winning the election (three races were still too close to call). Skybridge Capital founder Anthony Scaramucci blamed the Democrat’s loss of the Senate and House on Elizabeth Warren and Gary Gensler’s anti-crypto efforts. In total, 268 pro-crypto candidates were elected to the House of Representatives (versus 122 anti-crypto candidates), and so far, 19 pro-crypto senators vs 12 anti-crypto senators. The biggest anti-crypto scalp claimed was Senator Sherrod Brown, the Democratic chair of the Senate Banking Committee.
Who will replace Gary Gensler?
With Gary Gensler’s time at the SEC almost up, the Trump transition team is drawing up a shortlist of candidates to replace him as SEC chair. Names being thrown into the ring include Wall Street lawyer Richard Farley, who has represented some of the world’s biggest banks. Robinhood’s chief legal officer, Dan Gallagher, former SEC commissioner Paul Atkins, former SEC general counsel Robert Stebbins, and current SEC commissioner Mark Uyeda are also in the mix. Fox Business reporter Elanor Terrett asked a source close to the transition team about the names and the response was: “I promise you it will be someone pro-crypto.”
Until next week, happy trading!
