The 2024 U.S. presidential election has become one of the most watched elections in recent years. Although most people expected the election to be fierce, the results surprised many. Not only did Trump convincingly win the presidential election, but Republicans also secured majorities in the Senate and House of Representatives. Such a landslide victory would give Republicans ample leverage to push for changes in the coming years. The cryptocurrency space is expected to undergo significant change, and we believe the next 12 months will be a positive period for cryptoassets.

One ​​thing that is different about the 2024 election is that there is an "encryption agenda" in this election, and the winning president and his core advisory team are very concerned about the Cryptocurrency friendly. Cryptocurrency companies have heavily supported Trump and key Republican candidates through donations. It’s no surprise, then, that the crypto industry is one of the main beneficiaries of this Republican sweep.

There has been a lot of discussion about what this election will mean for the crypto industry, but below Here are a few of the major impacts:

SEC changes. Under the leadership of Gary Gensler, the SEC and other Biden appointees have implemented aggressive regulations on the crypto industry. Despite repeated industry calls for regulatory guidance, the SEC has persisted in managing through enforcement actions. During Gensler's tenure, more than 2,700 enforcement actions were initiated and fines totaling $21 billion were issued. This makes it difficult for many projects to do business in the United States.

Trump made it clear during the campaign that he would replace Gensler if elected. Sure enough, last week Gensler announced that he would resign as SEC chairman on January 20, 2025. Several candidates have been nominated to take over, and they are generally seen as more supportive of the crypto industry. This means that existing enforcement actions may be reversed and the SEC will take a more collaborative regulatory approach.

Improvement of the congressional environment. In the past, one of the challenges faced by the crypto industry was that it was difficult to pass any favorable legislation in the U.S. Congress because most lawmakers either lacked understanding of cryptocurrencies. However, following this election, approximately two-thirds of members of Congress are considered pro-cryptocurrency. This will potentially lead to a regulatory framework that supports innovation, making projects easier to finance and providing institutional fundingBen cleared the way for entry into the crypto space.

Proposal for a strategic Bitcoin reserve. During the campaign, Trump told his crypto supporters that if elected, he would push for the establishment of a strategic Bitcoin reserve. reserves rather than allowing the United States to continue disposing of previously seized Bitcoins. The proposal quickly gained traction after the election. If this proposal comes to fruition, the market will begin to speculate whether this means that the United States will become a net buyer of Bitcoin rather than a seller. If MicroStrategy alone can influence the price of Bitcoin, imagine the impact of the United States establishing a strategic Bitcoin reserve. More importantly, how will others react? Will they come up with similar plans?

DeFi support. Even before the election, the Trump-backed team had launched World Liberty Financial in September 2024, aiming to provide decentralized lending services and implement governance through the native token WLF. The project has raised more than $50 million to date, with the latest investment coming from crypto entrepreneur Justin Sun, who invested $30 million this week. WLF plans to raise a total of $300 million. Whether it ultimately raises $300 million or $50 million, the significance of this project is far greater than its dollar amount - it provides a huge inspiration to DeFi developers and innovators. More importantly, this kind of DeFi project supported by the incoming US president will have a profound impact on the entire industry.

Each of the above-mentioned events alone is enough to significantly promote the encryption market, and the combination of these events has an even more profound impact on the encryption industry. The market has yet to fully reflect the potential impact of these changes, which is why the US media calls this period the “Golden Age of Crypto”.

In addition to all of the above, Trump also expressed his desire to make the United States the "crypto capital of the world." To some extent, the United States is already the de facto crypto leader. Many major infrastructure projects, some of the largest blockchain infrastructure companies, and decentralized applications originated in the United States. The United States also has the world's largest licensed cryptocurrency exchange, the largest crypto investment bank, and the largest Web3 venture capital pool.

In addition, the United States accounts for about 40% of the world's Bitcoin mining computing power (compared to 17% in 2021), becoming the largest country in Bitcoin mining. center. Most global crypto transactions are also denominated in U.S. dollars, and major stablecoins are pegged to the U.S. dollar.

The United States is therefore already in many ways the global crypto hub. However, if the United States plans to consolidate or further expand its dominance, what does this mean for other, especially major financial centers such as London, Tokyo, Dubai, and Hong Kong? More importantly, can Europe afford to miss out on the Web3 era of innovation and fall behind again after the Web2 era?

Some may question whether Trump will actually deliver on these promises, but I think there is a good chance he will. Trump does not follow traditional rules, and the leverage from this election victory is very powerful.

In addition, Trump also has two crypto-native advisers - Elon Musk and JD Vance. The new Secretary of Commerce Howard Lutnick also serves as a director of Cantor Fitzgerald. Chairman and CEO, and Cantor Fitzgerald just acquired Tether (the world’s largest stablecoin USDT of issuers). Coupled with a more friendly pro-crypto Congress, it shouldn’t be difficult to push these initiatives

Against the above background, it becomes especially important to discuss the impact of all this on crypto asset prices. As you can see from the table below, the 12 months after the US election have historically been a period of strong crypto asset price performance. p>

Two main observations here:

Regardless of who wins the presidential election and what the interest rate environment looks like, cryptoassets will have a strong performance in the 12 months following the U.S. election. We attribute this to two factors: a) clarity from the election results and renewed optimism; The continued push for the Bitcoin halving cycle/crypto cycle

In the 12 months following the past two elections, altcoins (represented by ETH) have returned approximately 3 times that of Bitcoin.

As of 30 days after the 2024 election, Bitcoin is up 46% and Ethereum is up 58%. We believe there is still significant room for upside over the next 11 months.

To better understand the opportunity for altcoins, let’s look at the chart below, which shows the performance of altcoins relative to Bitcoin. As you can see, there are stages within the cycle where altcoins outperformed Bitcoin. We call these phases “altcoin cycles” or “altcoin seasons.” The most recent major altcoin cycle occurred in January 2021 and peaked again in November 2021. A cycle begins with February 2017, and peaked in January 2018

Notable. Yes, these altcoin cycles roughly overlap with the post-election 12-month period, which we believe is primarily due to strong price performance in the early weeks after the election and a shift in investor sentiment toward risk. -align: left;">Additionally, this trend has attracted retail funds into the crypto asset class, which tend to prefer riskier small- and mid-cap tokens because they are not subject to liquidity constraints from institutional investors. Additionally, in Altcoins tend to underperform at this point in the cycle, making their risk-to-reward profile more attractive than that of large-cap tokens

If this historical relationship holds true, then we should expect altcoin season to begin.