The 2024 US Presidential election has positively impacted the cryptocurrency market, with a surge in market inflows that began even before the results were announced.
New investors heading into crypto are joined by institutional investors buying into a new round of exchange-traded Bitcoins ETFs, and the market gained a sense of optimism and self-belief that was sorely lacking in the run-up to the election.
The crypto market briefly topped $3.1 trillion on November 14th, which meant that crypto surged past the last record high from 2021 when the pandemic stimulus led to a massive influx of funds to the asset class.
So, what has driven the latest tide of crypto market inflows?
Election Outcome
In the lead-up to the election, President-elect Trump made bold claims of creating a Bitcoin Federal Reserve, or Strategic Bitcoin Stockpile in his words. He outlined ambitious plans to make America the global crypto capital with clear regulations and a crypto-friendly environment, and he even bought burgers with Bitcoin for a photo opportunity.
In a recent interview with Benzinga, Binance CEO Richard Teng commented on regulatory clarity driving crypto market growth, “Close to one-third of global regulators now have frameworks for crypto. This clarity is critical for mass adoption.” Teng continued, “Institutions spend months conducting due diligence before entering this space. Now that the U.S. and global environments are more favorable, we expect even more institutions to onboard in 2025.”
In the days following the election, Pennsylvania amended its laws to allow the State treasury to hold Bitcoin, Jersey City's Mayor and Business Administrator verbally committed to Bitcoin ETFs, and the new President nominated Cantor Fitzgerald CEO Howard Lutnick to lead the Department of Commerce. The general consensus was that the Securities & Exchange Commission, the bane of so many crypto tokens over the years, would also get new leadership under Trump.
So, the Republican win felt like levers falling into place to open the floodgates, and many doubts about cryptocurrencies' long-term viability in the US economy were swept away. The President-elect has reaffirmed his commitment to crypto time and again, and his victory was a clear sign to investors that it was time to get on board.
Now, the market has to wait for those crypto promises from the Trump administration to become a reality, including the Bitcoin reserve and the formation of a Crypto Presidential Advisory Council. However, there is no doubt that this administration is more open to crypto than the previous government.
Institutional Investment and Timing
2024 was already a landmark year for institutional investment in the crypto market. Following SEC approval, BlackRock launched its IBIT spot Bitcoin ETF in January, and there has been a steady influx of institutional money into crypto ETFs all year.
On November 19th, less than two weeks after the election, BlackRock introduced options trading on its Bitcoin ETFs. It was a massive moment for the market, and 354,000 contracts changed hands that day, with $1.9 billion in notional exposure. It was a huge story and tied in neatly to the post-election boom. The timing of this was coincidental and had nothing to do with the election, but it has undoubtedly added to the gold rush atmosphere surrounding crypto and contributed to the market inflows.
BlackRock's Spot Bitcoin iShares Bitcoin Trust ETF is an exchange-traded package for those who want to trade in crypto without holding cryptocurrency. This clears several regulatory hurdles and makes it simpler for companies to do business. Crypto ETFs are one of the year's biggest financial success stories, and many other products are expected in the months ahead.
Market Performance
Since the election, the crypto market has gone into overdrive, with traders seeing 40% gains on their Bitcoin investment in just nine days. Inevitably, that brings a fresh wave of investment. The market's ongoing success becomes a self-fulfilling prophecy as more and more investors are drawn to easy returns and headlines like: 'Bitcoin to hit 200K.'
As the crypto market is primarily based on sentiment and confidence rather than increased yields or company performance, any spike will inevitably bring investors. They tend to fall away at the first sign of a dip, and this could be a temporary phenomenon, a wild honeymoon period, with a subsequent trough in trading. Simply put, this is the next Bull run, or we are heading for a dramatic fall at some point.
How the market soaks that up will be a real acid test of how far the crypto market has come in recent times.
Conclusion
The new President-elect's outspoken support for the crypto market and desire to integrate crypto into treasury funds gave a shot of adrenaline to the market as a whole. Other factors already in play contributed heavily to the market inflows, but a pro-crypto President-elect, a period of high inflation, increased institutional investment, and a market powerhouse all combined to create the perfect opportunity for crypto to go to the next level. So far, things are looking good. Time will tell if it can be sustained.
This article was written by FM Contributors at www.financemagnates.com.
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