Bitwise CIO Matthew Hougan said in a November 6 memo that Donald Trump’s victory is a fact the American presidential elections will catalyze a ‘Golden Age of Crypto’ as the new administration will improve the regulatory landscape.
Crypto markets rose significantly when Trump’s chances of winning the election rose above 95% on the prediction markets. Bitcoin (BTC) hit a new all-time high of around $75,650 after months of price action within the range.
At the time of writing, the flagship crypto was trading at $75,300, up 7.69% from the past day, based on CryptoSlate data.
However, not all cryptocurrencies have performed equally over the past 24 hours, with Hougan highlighting this gap to warn investors to be ‘more selective’ with their investments.
Regulatory barriers are falling away
According to Hougan, the first fundamental change in a pro-crypto presidency would be a shift in the hostile approach of the US Securities and Exchange Commission (SEC) and other regulators towards the sector.
The Bitwise CIO said:
“Crypto has been working with both hands tied behind its back for the past four years.”
In recent years, the SEC has taken a “regulation by enforcement” approach, filing lawsuits against crypto companies, usually for distributing unregistered securities, without disclosing what rules these companies were violating.
Many have said the regulator’s approach has stifled the sector’s growth. The criticism is echoed internally, including by Commissioner Hester Peirce, who told lawmakers at a hearing that the SEC’s approach to cryptocurrencies has been a disaster.
Meanwhile, Coinbase CLO Paul Grewal recently unveiled that the The Federal Deposit Insurance Corporation (FDIC) had ordered banks to refrain from offering crypto services in more than twenty incidents.
Hougan believes the new administration is expected to be supportive, given Trump’s friendly comments about the crypto industry during his campaign. This change in stance includes new leadership at the SEC and a possible end to restrictive practices such as Operation Choke Point 2.0.
Hougan believes the sector is ready for “greater institutional investment” and broader adoption as these shifts materialize. The industry can now focus on innovation unhindered by regulatory hurdles, potentially accelerating the mainstream integration of crypto.
Driving prices
Despite significant price increases in the past 24 hours, Hougan pointed out that crypto was already showing solid fundamentals. He cited robust institutional demand, with inflows of more than $23 billion into Bitcoin Exchange-Traded Funds (ETF) and growing interest from top hedge funds and blue chip institutions.
Furthermore, Bitcoin’s halving in April 2024, in addition to growing real-world examples such as stablecoins and the Polymarket prediction market, also provided a strong foundation for growth.
Meanwhile, rising US debt and potential interest rate cuts are creating a macroeconomic environment that could further strengthen Bitcoin’s appeal as a “must-have” asset.
Still, a new pro-crypto government is an important catalyst to further increase crypto prices.
Selecting good investments
While optimism is widespread, Hougan cautioned against a one-size-fits-all approach to crypto investing. He emphasized that despite a more supportive environment, most projects will struggle to thrive and may falter as the sector matures.
Hougan added that the regulatory reset will provide a level playing field for projects to succeed or fail on their merits. He advised investors to take a disciplined approach to distinguish promising projects from those that may be underperforming.
Nevertheless, the Bitwise CIO said the outlook is now brighter than ever for the early adopters who invested in crypto amid uncertainty.