[UNITED STATES] Bitcoin surged Wednesday, reaching all-time highs as former President Donald Trump beat Vice President Kamala Harris to retake the White House. According to Coin Metrics, the flagship cryptocurrency's price was recently up 9% at around $76,052.66, having previously reached a new high of $76,493.86.
"The themes around the Trump trade for crypto are deregulation, potential tax cuts for an asset that is both held long term but also day traded, less dependency on parts of government like financial institutions and the Fed — or at least an alternative for decentralized currency — and overall support of risk assets and the growth of crypto ... is really what's making it grow," Sylvia Jablonski, vice president and chief investment officer of equity exchange-traded funds, told CNBC.
The cryptocurrency market's response to Trump's victory was not limited to Bitcoin alone. Other major digital assets also experienced significant gains, reflecting the broader optimism surrounding the incoming administration's potential crypto-friendly policies.
Ether rose 11%, while the cryptocurrency linked to its rival, Solana, soared 13%. XRP, a payment cryptocurrency, rose more than 5%. Meanwhile, memecoins skyrocketed, with Dogecoin up more than 15%.
Coinbase shares rose 31.11%, marking the company's biggest day since its inception. MicroStrategy, which trades as a high beta play on the price of bitcoin, rose 13%.
Industry experts suggest that Trump's victory could lead to a more favorable regulatory environment for cryptocurrencies, potentially accelerating institutional adoption and innovation in the sector. This sentiment is largely based on Trump's campaign promises and his recent pro-crypto stance.
While bitcoin benefits from the inflation hedge story, investors in other cryptocurrencies and Coinbase believe the US regulatory climate will be more favorable of the crypto business, as promised by Trump during the campaign.
Voters in this election were concerned about the federal debt, which climbed by 8% in the fiscal year 2024 to $1.8 trillion, as well as the substantial tax cuts promised by both Trump and Harris. Bitcoin, like gold, is viewed by many investors as a hedge against the possibility of fiscal and monetary policy that reduces the value of the dollar and increases inflation.
The potential establishment of a strategic national bitcoin reserve, as proposed by Trump during his campaign, has sparked particular interest among investors and industry observers. Such a move could significantly boost Bitcoin's legitimacy as a store of value and potentially influence other nations to follow suit.
Early in the campaign, Trump positioned himself as a pro-crypto candidate, courting the business directly. That included promises to establish a crypto advisory council within his first 100 days in office, to enact favorable regulations to encourage domestic "made in the USA" bitcoin mining, to launch a strategic national bitcoin stockpile, and, perhaps most significantly, to replace Securities and Exchange Commission chair Gary Gensler.
Gensler has become an antagonist to the crypto sector, which has long been dissatisfied by the SEC's failure, under his leadership, to give clear advice for U.S. crypto enterprises, instead opting to govern through enforcement, according to the industry. As a result, this year's presidential election is widely regarded as the most crucial in the crypto industry's history.
However, some analysts caution that the market's euphoria may be premature, noting that campaign promises don't always translate into policy actions. They emphasize the need for a balanced approach that addresses both innovation and consumer protection concerns.
"While President-elect Trump has claimed to make the United States the world's 'crypto capital,' the details of his plans remain to be seen, and I expect it to take some time to truly understand his stance on cryptocurrency," said Anthony Yeung, global head of strategic development at CoinCover.
"It's in the interest of the industry that the U.S. moves sooner rather than later when it comes to crafting a regulatory framework," he told reporters. "It requires focused and balanced regulation that emphasizes consumer protection and promotes innovation. Striking this balance will need close coordination among regulators, policymakers, and industry participants."
The coming months will be crucial as the crypto industry awaits concrete policy proposals from the incoming administration. Market participants will be closely monitoring any signals from Trump's transition team regarding appointments to key regulatory positions and potential legislative initiatives related to digital assets.
In the 90 days after election day in 2012, 2016, and 2020, bitcoin returned around 87%, 44%, and 145%, respectively. That's partly because election years coincide with Bitcoin halving years, when the cryptocurrency's supply shrinks. Post-election results have also tended to coincide with big Federal Reserve policy changes. This year, the market expects additional interest rate cuts.
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