US Election Results Drive Bitcoin Surge and Increased Institutional Interest
This is a segment from the Forward Guidance newsletter.
Recent Developments in Crypto Following the US Election
Two weeks post-election, Bitcoin (BTC) reached new highs, with significant price movements observed since Donald Trump’s victory.
Price Rally Overview
On Election Day, BTC increased by 8.8%, according to Coinglass data. Subsequent days saw rises of 4.8% and 10.2% on November 9 and 10, respectively, followed by a 4.2% increase on November 14. Overall, BTC rose about 40% from a pre-election low of $66,880 to a peak of $93,300, marking its largest nine-day price increase since January 2021.
BTC surged past $94,900 early Wednesday, maintaining around $93,800 by 2 PM ET, reflecting a 1.5% increase over the previous day.
Political Context and Future Prospects
Trump's election reignited discussions around his crypto-related promises. With the Republican majority in Congress, optimism surrounds the potential establishment of a strategic bitcoin reserve, proposed by Senator Cynthia Lummis. She expressed hopes for adoption in 2025, suggesting the conversion of gold certificates to bitcoin could occur even before legislative approval.
Lummis indicated that legislation would facilitate government bitcoin holdings and assist states in managing their assets. Additionally, Pennsylvania lawmakers introduced a bill allowing the state treasury to hold BTC.
Corporate Adoption Trends
Following MicroStrategy's example, other companies are considering buying bitcoin for their treasuries. Michael Saylor from MicroStrategy stated that a US strategic bitcoin reserve would prompt global competitors to follow suit.
During the trading period after the election, US spot bitcoin ETFs attracted approximately $5 billion in net inflows. Bitwise CIO Matt Hougan noted that the election outcome mitigated reputational risks associated with crypto, anticipating exponential growth in institutional ownership starting Q1 2025.
Ether products also experienced demand, with $796 million in inflows following the election, despite recent outflows.
Market Reactions and Regulatory Changes
Robinhood added solana, cardano, XRP, and pepe to its platform, capitalizing on regulatory optimism. ETF issuers are adjusting strategies, with Bitwise proposing a conversion of its crypto index fund into an ETF. An amended filing for a Grayscale Bitcoin Covered Call ETF followed regulatory approvals for options on US spot bitcoin ETFs.
Future Considerations
Trump nominated Cantor Fitzgerald CEO Howard Lutnick for the Department of Commerce, indicating a possible shift towards a more crypto-friendly administration. Discussions between Trump and Coinbase CEO Brian Armstrong may also influence future appointments.
Industry experts emphasize the importance of the next SEC chair appointment, as it will significantly impact the crypto landscape. Potential candidates include SEC Commissioner Mark Uyeda and former Coinbase legal chief Brian Brooks.
Continued developments in the crypto sector are anticipated, driven by evolving market dynamics and regulatory frameworks.