With Trump In, Greed Is Good

It’s been under 24 hours since the US election results became official, and it’s already been a wild ride.

Crypto markets are rallying and shifting across the board. There’s also strong positive movement across decentralized finance (DeFi), Solana ($SOL), Ethereum ($ETH), and Bitcoin ($BTC).

What’s driving the optimism isn’t president-elect Donald Trump himself, but a broader optimism surrounding potential regulatory shifts, technological advancements, and surging demand.

Let’s see what’s happening – and what’s likely to keep happening.

DeFi Market Optimism with Trump’s Potential Influence

With the possibility of a more favorable stance toward DeFi under a Trump-led administration, decentralized finance tokens surged by 30%.

A look at DeFi markets on DeFiLlama showed an almost-uninterrupted wave of green, as protocol after protocol made big gains in TVL and token performance.

There’s a real sense that policy changes may foster continued growth in this sector. 

Traders anticipate that regulatory adjustments – including potentially a more crypto-friendly SEC – could boost DeFi adoption and innovation. 

The fact that crypto continues to expand even against hostile SEC headwinds gives optimism at the growth that could be achieved under a more favorable SEC outlook.

Solana ($SOL) Rally Gives Way to Institutional Support

One of the feel-good stories of 2024, Solana also saw a substantial rally, reaching close to $200, buoyed by high adoption rates and ecosystem growth, as well as institutional support. 

The network’s scalability and low transaction costs have attracted developers and users alike, positioning Solana as a strong competitor to Ethereum. 

Technical analyses suggest continued strength, with investors eyeing the $200 resistance level as a critical marker for future gains.

Ethereum’s ($ETH) Surge Pushes Investor Confidence Up

Ethereum gained momentum, surpassing $2,500 as futures markets showed increased institutional interest. With Vitalik Buterin continuing a series on $ETH’s technical fundamentals and its transition to Ethereum 2.0, investor confidence is growing.  

The upgrades promise improved scalability and efficiency. 

While analysts expect some volatility, the general outlook remains bullish due to the growing demand for Ethereum’s smart contract capabilities.

Crypto Sentiment is ‘Extreme Greed’

The simplest and easiest crypto metric – the Bitcoin Fear & Greed index – was balanced at a perfect 50/100 just a few days ago. But it has since shifted from neutral to outright greedy.

The sentiment shows that investors are highly optimistic following Bitcoin’s recent peak at $76K.

But while greed is good, high sentiment levels often precede market corrections, and analysts caution that the current exuberance could lead to increased volatility. 

Or, in the words of crypto X:

Even with the general euphoria – or perhaps because of it – investors need to monitor market trends closely and be prepared for potential fluctuations.

An Official Bitcoin Reserve?

Back in the day (whole weeks ago!) there was talk about a US strategic Bitcoin reserve.

With Trump headed back to the Oval Office, that talk is one step closer to reality.

Building up a reserve of $BTC – the proposed target is 1M Bitcoin – could give the US government a significant inflationary hedge of its own.

Whether or not it would be effective as a financial tool on the national level remains to be seen. 

But it would further legitimize cryptocurrencies in mainstream finance and could influence global financial strategies, solidifying Bitcoin’s position as a significant asset class.

Traders and investors are navigating a market influenced by potential regulatory changes, technological advancements, evolving institutional attitudes, and the overarching influence of the first Crypto President.

It’s an exciting, dangerous time for crypto.

References

• DeFi Markets (DeFiLlama)