Potential Policy Changes After the U.S. Presidential Election

Even before the election, during a Bitcoin conference, Donald Trump expressed his intention to implement measures to support cryptocurrencies if he were to take office in the White House. This article discusses the direct and indirect impacts on cryptocurrencies following the U.S. presidential election across three dimensions.

U.S. Dollar Policy

The appreciation and depreciation of the U.S. dollar have significant effects on cryptocurrencies. In April of this year, Trump stated on social media that the dollar’s appreciation and the yen’s depreciation were major disasters for the United States. He expressed a preference for a weaker dollar and opposed the dollar’s appreciation against the yen for several reasons:

1. A stronger dollar is detrimental to U.S. exports and manufacturing development, exacerbating the country’s trade deficit.
2. Trump accused Japan of manipulating its currency to deliberately weaken the yen, thereby harming U.S. interests.
3. Trump advocated for measures to curb excessive dollar appreciation, believing that a moderately weaker dollar would enhance the competitiveness of U.S. industries.
4. Opposition to a stronger dollar also aligns with the sentiments of certain voter groups.

Dollar Index Post-Election Day Trends

However, following Trump’s election, the dollar index surged further, reaching 107, close to its yearly high. This market reaction reflected expectations regarding Trump’s hardline stance on tariffs. Trump has indicated that he plans to raise tariffs further to protect domestic economic interests, which would also harm the revenues of foreign businesses. From an economic perspective, this has strengthened the dollar against other currencies, causing the dollar index to rise.

In the long term, Trump’s position opposing dollar appreciation remains clear and consistent. Therefore, the counteracting effects of tariffs on the dollar’s value are likely temporary. Over the long term, Trump’s anti-dollar appreciation stance will dominate his dollar policy. Additionally, beyond Trump’s positions and tariff impacts, the aggressive commercial nature of his presidency may disrupt the current path of declining inflation. The Federal Reserve’s monetary policy and the labor market will also play significant roles in shaping the future of the dollar index.

Cryptocurrency Policy

As a crypto-friendly U.S. President, Donald Trump has openly or subtly expressed support for cryptocurrencies on multiple occasions. This includes mentioning the possibility of using Bitcoin (BTC) as a U.S. strategic reserve and supporting a DeFi protocol initiated by his sons (World Liberty Financial).

BTC as a Strategic Reserve

During a Bitcoin conference held in the U.S. in July, Trump proposed that, if officially elected, he might consider Bitcoin as one of the U.S. strategic reserves. He assured cryptocurrency enthusiasts that under his leadership, the U.S. would maintain its dominance in the cryptocurrency sector. He also pledged to prevent the Biden administration’s crackdown on cryptocurrencies, ensuring the future of crypto and Bitcoin would be built in the U.S. rather than being driven overseas.

DeFi Protocol (World Liberty Financial)

Trump’s sons, Eric and Donald Jr., launched a cryptocurrency project named World Liberty Financial ($WLFI), aimed at strengthening the U.S. dollar’s presence in the decentralized finance (DeFi) space by introducing a dollar-backed stablecoin. The WLFI token is pegged to the U.S. dollar, offering a stable store of value and supporting decentralized financial services such as lending and liquidity pools. WLFI token holders can participate in platform governance by voting on key decisions. Although a detailed product roadmap has yet to be released, the project is currently in the pre-sale phase.

Acquisition of Crypto Trading Firm Bakkt

Odaily News: Trump Financial Company to Acquire Bakkt

On November 19, news broke that Trump Media & Technology Group was in “deep negotiations” to acquire cryptocurrency exchange company Bakkt. After the news was announced, both companies’ stock prices rose rapidly.

Trump Media & Technology Group, in which Trump holds a majority stake, operates the Truth Social application and is traded on Nasdaq under the ticker DJT. Its stock surged by over 16% following the announcement.

Bakkt, created by the Intercontinental Exchange (the parent company of the New York Stock Exchange), saw its stock price soar by over 162%, despite multiple trading halts due to volatility. Notably, Bakkt’s former CEO, Kelly Loeffler, was a co-chair of Trump’s inaugural committee.

Government Officials

During his election campaign, Donald Trump not only expressed support for cryptocurrencies but also promised to make key personnel changes in important government positions.

SEC Chairman Gary Gensler

As part of Trump’s commitments to the cryptocurrency sector, he declared during his campaign that, if elected, he would immediately remove SEC Chairman Gary Gensler from his position.

Gensler has been perceived as an adversary by cryptocurrency supporters. Although he eventually voted in favor of BTC spot ETFs and ETH spot ETFs in 2024, his tenure has been marked by significant regulatory actions against cryptocurrencies. In 2023, his statements fueled panic surrounding Binance and BUSD, as well as sharp declines in the value of several tokens labeled as securities.

Beyond dismissing Gensler, Trump stated that he would rescind several lawsuits Gensler initiated against crypto institutions, such as those targeting Binance and Coinbase for allegedly engaging in illegal securities activities. Trump also promised to pardon Ross Ulbricht, the founder of Silk Road, if elected.

If Trump fulfills these promises and corrects regulatory biases against cryptocurrencies, it would undoubtedly be a long-term positive development for the industry.

Department of Government Efficiency (D-O-G-E) Head Elon Musk

Trump promised to establish a Government Efficiency Committee and appointed Elon Musk as its head. Interestingly, the committee’s acronym, DOGE, shares its name with the meme coin $DOGE, which Musk publicly supports. The department’s mission is to streamline the federal government by reducing the number of bureaucratic positions and improving operational efficiency. However, its practical impact on governance is expected to be minimal. The symbolic nature of the acronym suggests the Trump administration’s broader support for the cryptocurrency space.

Other Cabinet Appointments

Secretary of Commerce: On November 19, Donald Trump, as the incoming President, nominated Howard Lutnick, CEO of Cantor Fitzgerald, as the new Secretary of Commerce. Lutnick’s firm manages over half of Tether’s reserves. (According to reports by the Wall Street Journal, Tether’s $39 billion USDT reserves, primarily U.S. Treasuries, are managed by Cantor Fitzgerald). Lutnick has publicly stated that BTC, like gold, should be considered a commodity.

Impact of Policy Changes on Cryptocurrency Sectors

Following the aforementioned policy changes, several cryptocurrency sectors are likely to be affected.

ETF Tokens

As the U.S. remains a major battlefield for cryptocurrencies, “ETF Tokens” here refer to U.S.-based spot ETFs, which provide significant price support for tokens like BTC. Currently, the U.S. has two spot cryptocurrency ETFs: BTC and ETH.

BTC Spot ETF Fund Flow

ETH Spot ETF Fund Flow

The net inflows for both BTC and ETH spot ETFs increased significantly following Trump’s victory, exceeding the figures from prior months. This indicates that traditional institutional investors perceive Trump’s presidency as favorable to the cryptocurrency market, channeling funds through ETFs.

BTC and ETH ETFs, being the primary avenues for U.S. institutional capital to enter the market, stand to gain the most from this development. Among them, BTC, with its stronger commodity-like attributes, is more favored.

Additionally, Trump’s long-term stance on the U.S. dollar and economy leans toward dollar depreciation. For retail investors, a weaker dollar often raises risk appetite, benefiting cryptocurrencies as risk assets. BTC, as a symbolic asset, is likely to be the first choice.

“Security” Tokens

Tokens defined as securities by the SEC in June 2023

During Gary Gensler’s tenure, many tokens were labeled as securities by the SEC, leading to significant price drops, particularly in mid-2023. If Gensler is removed and a crypto-friendly administration takes office, these tokens are highly likely to be exonerated and no longer classified as securities, enabling their relisting in the U.S. market.

Even aside from Gensler’s removal, the crypto project World Liberty Financial ($WLFI), initiated by Eric and Donald Trump Jr., shares a similar trajectory with these “security” tokens. Currently in its public sale phase, WLFI is expected to follow similar developmental paths. Thus, such tokens could see significant benefits under Trump’s presidency.

RWA Sector

While the RWA (Real World Asset) sector has not received explicit support, it stands out as a viable choice for institutional funds gradually shifting toward the crypto market, following spot ETFs. Current RWA assets, such as stablecoins, are primarily backed by tokenized dollars and U.S. Treasuries, aligning with the low-risk preferences of traditional institutions.

World Liberty Financial, developed by Trump’s sons, incorporates an investment element in its business model. As a bridge between traditional finance and blockchain, resolving compliance issues around RWAs like stocks, real estate, and gold appears to be a matter of time. Once these assets are tokenized, they can benefit from decentralization advantages like increased liquidity, efficiency, and transparency. After overcoming compliance barriers, this sector could experience rapid growth.

MEME

Politifi MEME

In the six months leading up to the election, meme coins tied to political figures gained traction, with tokens themed around Trump and Harris generating immense speculative activity. Following Trump’s victory, a simple phrase or concept could spark a new wave of meme coins, similar to the previous rise of $MAGA.

DOGE

DOGE merits special mention due to Trump’s establishment of the Department of Government Efficiency (D-O-G-E), whose acronym conspicuously matches $DOGE. This deliberate naming extends DOGE’s concept from the Web2 sphere into Web3. Beyond Elon Musk and Tesla, any developments related to the Department of Government Efficiency or significant political decisions could influence $DOGE, transforming it from an ordinary meme token into one of the most substantively endorsed tokens within Politifi.

Conclusion

Following Donald Trump’s election, the cryptocurrency sector is expected to experience significant positive momentum. In the short term, Trump’s crypto-friendly policies, personnel changes, and supportive statements will provide a foundation of support. In the long term, his bearish stance on the U.S. dollar will likely enhance cryptocurrency liquidity.

As mentioned, under this combined short- and long-term environment, BTC and ETH, supported by spot ETFs, will likely become key investment options for traditional U.S. institutions. Another promising avenue for institutional investment is the RWA (Real World Asset) sector, which aligns with their preference for low-risk assets. Tokens previously classified as securities by the SEC are also expected to be exonerated. Meme coins, meanwhile, are anticipated to remain active and vibrant, fueled by Trump’s election victory.