Crypto's bull run gains momentum as a "crypto-friendly" U.S administration is set to take control of the biggest economy in January.
Once a staunch critic of Bitcoin and the associated cryptos, Donald Trump came around a big way in the recent U.S election campaign. He wholeheartedly embraced the idea of a future where digital assets would play a key role and promised a much more crypto-friendly environment if elected. While his opponent Kamala Harris showed some pivot towards crypto, it wasn’t that obvious. As Trump won the presidency, Bitcoin unsurprisingly, powered to new all-time highs.
Crypto assets surged on Wednesday following Donald Trump's U.S. presidential victory, with Bitcoin (BTC) hitting a fresh record high of $76,330. After a brief period of consolidation overnight, BTC is trading around $76,600 as I write this. The rally reflects optimism that the new administration may foster a more favorable regulatory climate for digital assets in the world’s largest economy, potentially opening the door for broader adoption and growth in the sector.
The intense crypto market rally led to $592 million in liquidations of leveraged derivative positions across various crypto assets, according to data from CoinGlass (lower chart below). Of this, a significant portion—around $390 million, came from liquidated short positions that had been betting on price declines. This represents the largest short squeeze observed in at least the past six months, as traders with bearish positions were forced to exit amidst rising prices.
Cryptocurrencies like Bitcoin, Ethereum, and other altcoins all surged in value as traders and investors rebalanced their portfolios in anticipation of this U.S government policy shift. Investors anticipate a favorable regulatory environment under Trump, who has previously spoken out in favor of free markets and limited government intervention in private sectors. His administration could focus on deregulating the financial sector, potentially creating a more welcoming environment for crypto companies and investors.
According to Bloomberg (top chart above), iShares Bitcoin ETF saw a record volume in early November. This high-volume day, approaching $5 billion reflects growing investor interest - fueled by favorable regulatory developments, now getting a major boost with the political shift in the United States. The sustained increase in volume from mid-2024 onwards suggests a broader acceptance of Bitcoin ETFs as part of mainstream finance.
The data suggests that Bitcoin ETFs are on a growth trajectory, with the potential for continued popularity and adoption as market dynamics evolve. Trump’s win has invigorated the crypto markets, sending Bitcoin and other digital assets to new highs. With expectations of regulatory leniency, tax reform, and pro-innovation policies, the crypto community anticipates a favorable landscape for growth under the incoming administration.
Nonetheless, crypto’s notorious volatility remains a challenge, and investors are reminded to consider the risks associated with digital assets, especially given the relatively uncharted territory of cryptocurrency regulation under a new administration. Ultimately, a new U.S government could play a pivotal role in shaping the future of cryptocurrency - both in the United States and globally.
Originally published at http://khanfk.substack.com.
