In the early hours of the Asian trading session on 6 November, as the first results of the U.S. Presidential elections started to hit the wires and it became increasingly clear that Donald Trump would return to the White House, Bitcoin (BTCUSD) hit a new all-time high. According to Coinbase, BTCUSD closed at 75,645 on 6 November, above the previous record of 73,835. Since then, Bitcoin has been establishing new all-time highs essentially every single day. Overall, it has risen by more than 30% since 5 November. The stocks of companies either directly or indirectly involved in cryptocurrencies, such as Nvidia and MicroStrategy, also marched higher in response to election results.
Such a favourable market reaction to Trump’s victory stems from investors’ belief that his Administration, coupled with a friendly Congress, will effectively deregulate the crypto industry, facilitate its expansion and implement a coherent regulatory framework that will serve investors and consumers for years to come. ‘It should be said, argues Kar Yong Ang, a financial market analyst at Octa broker, that this belief is not without foundation. Trump has managed to lure many crypto fans to his side with his bold moves, clear views and a strong focus on deregulation’.
Indeed, as Octa explained in some of its previous materials, Trump has been a lot more explicit in his support of crypto than Kamal Harris. Unsurprisingly, many crypto enthusiasts, as well as some serious crypto investors, supported Trump over Harris. For example, in a rather bold move, Donald Trump attended a Nashville Bitcoin conference in July, where he advocated for creating a federal Bitcoin reserve and highlighted the importance of attracting more Bitcoin mining operations to the United States. Another crypto-friendly gesture was Trump’s alleged promise to fire Gary Gensler, the Chairman of the Securities and Exchange Commission (SEC), whom many in the cryptosphere regard as an adversary due to his numerous lawsuits against crypto projects. Under a new leader appointed by Donald Trump, the SEC could potentially provide a more favourable regulatory environment for digital assets. Furthermore, now that Republicans are in full control of both the Senate and the House of Representatives, Donald Trump has a door wide open to push forward his agenda. This is what the official 2024 Republican Party Platform said about crypto:
‘Republicans will end Democrats’ unlawful and un-American crypto crackdown and oppose the creation of a central bank digital currency. We will defend the right to mine Bitcoin and ensure every American has the right to self-custody their digital assets and transact free from government surveillance and control’.
Needless to say, the new Congress is a lot more likely to enact legislation favourable to the crypto industry. ‘As things currently stand, I believe there is every reason to expect the approval of more crypto-focused ETFs [exchange-traded funds] that, for example, may be based on other cryptocurrencies, like Solana and XRP. Who knows, we might even get a Dogecoin ETF. Why not? Dogecoin is Elon Musk’s favourite crypto token, and Elon certainly has some weight on Trump’s team’, said Kar Yong Ang, a financial market analyst at Octa broker. Interestingly, according to CoinmarketCap, the value of Dogecoin has more than doubled since 5 November.
Regulatory easing triggers innovation, and more crypto products may enter the mainstream financial markets. This could potentially lead to increased institutional investment in cryptocurrencies, as ETFs provide a more accessible and regulated way for investors to gain exposure to the market.
Despite the recent price surge and record-high valuations, Bitcoin remains in demand. On Monday, MicroStrategy Incorporated disclosed that it had added 52,000 Bitcoins to its portfolio worth $4.6 billion over the last week, marking the largest purchase in the company’s history. The key question now is—can the rally continue?
Kar Yong Ang, a financial market analyst at Octa Broker, has this to say: ‘Franky, I’m beginning to have a bad feeling about this naked optimism. Euphoria rarely ends well, and this euphoria has been going on for a bit too long now. When expectations run high, the risk of a major disappointment rises, and I think we might see increased volatility in Bitcoin with perhaps a major downward correction around the corner. At the same time, the long-term future looks bright, especially if the Trump administration does go ahead with its plan to establish a federal Bitcoin reserve’.
The exact mechanics of creating this new national Bitcoin reserve remain unclear. Still, if the U.S. government were to start acquiring Bitcoin through open market purchases, the potential upside for the cryptocurrency could be enormous. Also, the direct involvement of the U.S. government will significantly bolster Bitcoin’s intrinsic value and legitimise it as a mainstream asset. As Kar Yong Ang explains, ‘the supply of Bitcoin is limited, so assuming the U.S. government does not engage in direct mining, the only way to fill up the reserve is via direct purchases. This intention, if there is one, better be kept secret because it will certainly take Bitcoin to the moon’. 
