(Kitco News) – Bitcoin (BTC) had one of its best days in history on Monday – surging more than 11.6% to hit a new record high of $90,000 – and analysts predict there could be more such days before this bull run is over as the incoming administration is expected to make a host of pro-crypto policy decisions in a bid to achieve Donald Trump’s goal of making the U.S. the “crypto capital of the planet.”
Trump is preparing to have the U.S. government adopt a more friendly stance toward cryptocurrency, according to a report from the Washington Post. To achieve this, his administration is considering multiple industry-friendly candidates for key positions, and his top advisers are consulting crypto executives on potential changes to federal policy.
Some of the potential changes include reorganizing several financial regulatory agencies and changing their leadership. The Securities and Exchange Commission (SEC) is at the top of this list, with many in the industry highlighting the oppositional stance the agency has taken towards crypto in recent years under the helm of Chair Gary Gensler.
While on the campaign trail, Trump promised to “fire” Gensler during a speech at a major Bitcoin conference. Under Gensler’s leadership, the SEC aggressively targeted the industry, taking numerous actions, including filing fraud charges against the leader of FTX and accusing Binance, the largest cryptocurrency exchange in the world, of multiple offenses over its business practices.
Other high-profile cases include charges against Coinbase and Kraken, the two largest U.S.-based crypto exchanges, and an ongoing legal battle with Ripple for allegedly failing to adhere to federal law requiring registration of their platforms and tokens.
“His days are numbered,” said Brad Garlinghouse, CEO of Ripple, regarding Gensler’s future in the SEC. Garlinghouse added that Ripple has “been in touch” with the Trump transition team. “I think it’s clear this is an area they intend to continue to focus on. I think Trump and a bunch of people realize there’s a new set of technologies that are likely to define the next couple of decades.”
To shake things up, the Trump administration is considering a mix of current regulators, former federal officials, and financial industry executives who have previously made positive statements about crypto, according to people familiar with the discussions who wished to remain anonymous.
While the process is still in the early stages, with the sources warning that the list of candidates is in flux, establishing pro-crypto regulators is a point of focus for the Trump administration as these regulators will have the power to determine whether crypto will become a larger, more formalized part of the financial system.
This will eventually have broader implications for the global economy, but some have warned that Trump is playing with fire, citing the 2022 collapse of FTX and the contagion effect it had on the broader crypto market.
According to the report, one of the names being considered for SEC Chair is Daniel Gallagher, a former SEC official now at the financial technology firm Robinhood, who previously admonished the SEC for taking a “scorched earth” approach to crypto.
Two other early frontrunners include Hester Peirce and Mark Uyeda, two Republican commissioners at the agency, the sources said. Both have criticized the SEC for policy and enforcement actions taken under President Joe Biden.
“The commission’s war on crypto must end, including crypto enforcement actions solely based on a failure to register with no allegation of fraud or harm,” Uyeda told Fox Business this month. “President Trump and the American electorate have sent a clear message. Starting in 2025, the SEC’s role is to carry out that mandate.”
Pierce is being considered as interim chair of the SEC once Trump takes over the White House, the report noted.
Other individuals under consideration for a role are Paul Atkins, a former SEC commissioner who aided in Trump’s last transition, and Chris Giancarlo, a former commissioner at the Commodity Futures Trading Commission (CFTC).
Whoever is ultimately chosen to head the SEC and other key regulatory positions, sources said they are expected to reverse course on some of the federal enforcement actions now underway. But it won’t be an easy road, as Gensler is a Senate-confirmed regulator, so if Trump fires him, it could trigger a novel and complicated legal battle over the president’s authority, the sources warned.
For that reason, it’s possible that Trump will demote Gensler to one of the several commissioners and install a new leader at the agency. In the past, top SEC officials have often stepped down after a change in administration, but Gensler has yet to comment on the matter.
For now, the crypto industry is excited about the potential changes in store under a second Trump administration, and expectations are high that a much more friendly regulatory approach is incoming.
Up to this point, Congress has not passed a single comprehensive law governing crypto products and services, and basic questions, such as when a crypto is considered a security or a currency, remain unanswered. That is expected to change in the years ahead, which is aiding bulls in their push to new highs.
“The recent U.S. election has initiated a new bull cycle in the cryptocurrency market,” said Maria Carola, CEO of StealthEX. “Under the Trump administration, crypto regulation is anticipated to be overhauled, including a more favorable stance from the SEC, which tightened its oversight during Biden's term. Investors expect clearer asset classifications and faster progress on stablecoin legislation.”
“Additionally, there have been early discussions about establishing a national Bitcoin reserve, which will fulfill Trump’s promises to boost the U.S. crypto industry,” she added. “His support measures — such as replacing SEC head Gary Gensler, establishing a Bitcoin reserve, and aiming to make the U.S. a ‘crypto superpower’ — could fuel market growth. Currently, the market reflects a strong bull trend, with the potential for Bitcoin to reach $100,000 by year-end, backed by key growth drivers.
Some of the other factors supporting the crypto market's growth include “a strong U.S. economic outlook, a continued 21% corporate tax rate (enabling larger buybacks), geopolitical stability, and a trend toward Fed rate cuts,” she noted.
“The US economy is doing very well and is only getting better. At least, that's what we see in the macroeconomic statistics,” Carola said. “Under Trump, the corporate income tax will remain at 21%, while Harris promised to raise it to 33%. Low tax means that large companies will still have a lot of cash for buybacks. And buyback is a life hack to improve the company's EPS in the quarterly report, since with growing revenue and a decreasing number of shares in free circulation, your earnings per share increase.”
“Therefore, Apple, Alphabet, Nvidia and others will continue to buy up their own shares for tens of billions of dollars, provoking further growth,” she said. “If earlier (at 35%) quarterly buybacks in the S&P 500 were carried out for $100-150 billion, then after 2018 (at 21%), these values increased to $200-250 billion. Thus, the stock market can continue to receive $1 trillion in additional liquidity per year.”
Turning to the macro picture, Carola noted that “Foreign policy is calming” and highlighted that “Trump’s first term was marked by the absence of major wars.”
“Now everyone believes that the same will happen,” she said. “In reality, it may turn out differently, but these are the market expectations.”
On the rate cut front, Carola suggested that “If the economy remains strong and inflation is stable, the Fed will be able to ease policy restrictions more slowly. If the labor market unexpectedly weakens or inflation falls faster than expected, the Fed will cut rates more quickly,” she concluded. “Powell has also said that the Fed plans to avoid stagflation.”
As for how long the currency Bitcoin rally could go, Chandra Duggirala, CEO of Tides.Network, sees at least three months of upside.
“It appears that the markets generally believe in a strong economy, and therefore all indices are rising,” Duggirala said in a note to Kitco Crypto. “With respect to Bitcoin, I believe that Bitcoin-friendly comments from the president-elect in Nashville, followed by the prospect that the US will add Bitcoin to a national stockpile, is driving this current market rally.”
“Also, rumors of a sovereign country buying Bitcoin for its wealth fund have been flying around. Which also helps funnel more money into Bitcoin,” he added. “We believe this rally will last at least 3 months, if not longer. But given the complexity of the global financial system, it is hard to predict when it will start to wane. The factors to watch are Money supply growth, bank credit growth, and the health of major bank balance sheets as some of them have taken huge losses on their bond portfolios.”
