(Kitco News) – The cryptocurrency ecosystem has responded to Donald Trump’s re-election with jubilation as the self-described ‘Crypto President’ is expected to establish regulatory clarity and bring increased legitimacy to the asset class, prompting Bitwise CIO Matt Hougan to say, “Make no mistake about it: Crypto won the election.”
“The GOP — which has pro-crypto policies written into its party platform — won the presidency decisively, took control of the Senate, and appears likely to retain control of the House,” he noted. “It will enter power in January with a strong mandate to follow through on its campaign commitments to the crypto industry.”
These promises include “A change of leadership at the SEC; The end of Operation Choke Point 2.0, which restricted crypto’s ability to access the traditional banking system; and Pro-crypto legislation on stablecoins, market structure, and more,” he highlighted.
After noting Bitcoin’s (BTC) rally to a new all-time high – which extended on Thursday to $76,700 after the Fed cut interest rates by 25 basis points – Hougan warned that “In the short term, I don’t know if we will hold the highs or pull back. But in the medium to long term, I see us going much, much higher.”
“To be specific: I expect Bitcoin to approach $100k this year and $200k in 2025,” he said. “Other crypto assets (which previously faced more regulatory risk) may do even better. I’ve never been more bullish than I am right now.”
Hougan discussed three key points that suggest a bright future for digital assets.
The first point he labeled as “Crypto Unbound,” saying, “We can finally see what crypto can do.”
“Crypto has been operating for the past four years with both hands tied behind its back,” Hougan said. “It has faced countless lawsuits from the SEC and hostile actions from other regulators. Even basic rights—like the ability to access banking services or custody Bitcoin in an institutional setting—have been constrained or under threat.”
“This hostile environment cast a massive shadow across the industry that precluded mainstream adoption and spooked institutional investors,” he noted. “It is one thing for a TradFi firm to invest in a disruptive new technology; it’s quite another to allocate to one that is under constant regulatory threat.”
“That is now gone, swept away in a momentous election that will install a pro-crypto Congress and president in Washington,” he declared. “I suspect the lifting of this veil will accelerate every aspect of crypto’s growth. It will drive greater institutional investment, spark widespread adoption of crypto technology by the financial services industry, and accelerate innovation and the development of mainstream applications.”
“Crypto has long promised that it can transform society in positive ways; now we get the chance to see it try,” Hougan underscored. “We are entering the Golden Age of Crypto.”
In his second point, he said that context is important and highlighted that prices were rising even before the election.
“I was strongly bullish on crypto almost regardless of what happened in [the] election,” Hougan said. “The industry currently has multiple tailwinds, including rapidly rising institutional demand; constrained supply; debt, deficits, and interest rate cuts; and rising real-world use cases.”
Regarding rising institutional demand, Hougan noted that this can be seen in “the massive inflows into bitcoin ETFs (more than $23 billion), in the fact that 60% of the top 25 hedge funds own Bitcoin, and in blue-chip institutions like Emory University now disclosing new positions in crypto.”
“The upside is staggering,” he said. “There are trillions of dollars of institutional assets that currently have 0% exposure to crypto; that was already beginning to change before [Tuesday’s] result, and it will accelerate from here.”
Harkening back to Econ 101, Hougan noted that “the Bitcoin halving in April 2024 reduced the amount of new supply entering the market by billions of dollars’ worth per year. Limited supply will meet increased demand in the coming months.”
He also acknowledged the elephant in the room during the recent election season: ever-increasing debt.
“One thing that the election has not changed, unfortunately: The U.S. deficit is now $36 trillion — and rising $1 trillion every 100 days,” he stressed. “The Congressional Budget Office expects this to continue under Trump's proposed policies; it may even get worse. Add in the likelihood of more rate cuts from the Fed and uneasy economic conditions, and you have the perfect macro setup to make Bitcoin a ‘must have’ asset for investors.”
On the topic of real-world use cases, he said to find evidence of increasing applications in daily life, you need “look no further than the massive success of Polymarket, the prediction market that correctly forecast the result of this election. Look also at areas ranging from stablecoins to gaming to decentralized finance. Crypto is going mainstream fast.”
“I could add more,” he said. “Wall Street’s embrace of crypto; rapid improvements in blockchain technology; companies and governments allocating to crypto. We were in a bull market before [the] election result; the outcome will only accelerate things.”
His final point was that “selection will matter.”
“I’ll close with a note of caution,” Hougan said. “The crypto market is ebullient today [11/6/2024], and all assets are rising. There is widespread expectation of a more supportive regulatory environment, and I think that’s well founded. That will likely mean more ETFs, more institutional adoption, and more growth.”
“But it’s worth remembering that not all crypto projects are good, and not all of them will succeed,” he emphasized. “All a regulatory reset will do is place crypto on a fair and even playing field, where it can succeed or fail on its own merits. It will be incumbent on investors to separate the wheat from the chaff, and to take a disciplined approach to evaluating risk.”
“We have exciting years ahead as an industry,” Hougan concluded. “Congratulations to all the investors who stuck their necks out on crypto when it was unpopular. You were the early adopters, who saw possibility when others saw only risk.”
