The Republican Trump 2.0 presidency has far-reaching implications for the crypto market. Regulation, taxation and the integration of cryptocurrencies into the mainstream economy were key campaign messages from president-elect Donald Trump. Should he follow through on these, it will be critical in shaping the sector’s future.
Under the Biden administration, crypto firms faced increased scrutiny from the Securities & Exchange Commission. In the run-up to the US election, bitcoin and other digital assets were volatile.
As soon as it became probable that Trump was going to win, bitcoin surpassed its previous record high, breaking past $75,000 ($73,500 March 2024), with investors favouring Trump’s pro-crypto stance. The rest of the crypto market has also surged.
The total crypto market cap was up 14% overnight on Tuesday and there was a significant uptick in trading volume.
Bitcoin and ethereum both spiked over 8%. Dogecoin and uniswap stole the show with 20% and 30% gains, respectively, 24 hours after the election. Bitcoin’s market capitalisation sits at $1.45-trillion, making up 59% of the market.
Trump, once critical of cryptocurrencies, has changed his stance and aligned himself with crypto-friendly policies. He now endorses a vision for the US as a crypto capital, advocating reduced regulation and adopting a pro-business framework that resembles his broader economic policies.
Trump’s economic policies are in favour of market deregulation, which often attracts institutional investors by lowering barriers to entry and reducing operational constraints where lighter compliance can drive innovation and competition.
Should he follow through on these, it will be critical in shaping the sector’s future
The regulatory landscape for the crypto industry in the US is still evolving. A pro-regulation approach to crypto serves as an incentive for more serious investors. For this reason, the sector is actively working to influence lawmakers.
Crypto’s appearance in politics points to its increasing influence not only as a financial asset but as a significant element in political funding and lobbying.
Both campaigns engaged with the industry to secure votes.
Will South Africa’s two-pot retirement system affect crypto?
With South Africans now able to withdraw one-third of their monthly retirement contributions from their savings pot since September 1, there could be a significant influx of capital into the economy. Investors may want to use some of their retirement savings to diversify with crypto.
Crypto is a volatile, risky asset and is not recommended to form the basis of your pension savings.
It is not advised to withdraw from your retirement annuity. Investors need to carefully consider the consequences and consult an expert. Each time you withdraw your savings, the amount available to provide you with an income in retirement will be reduced. In addition, that savings withdrawal benefit will be taxed and may push you into a higher tax bracket.
De Wit is country manager for Luno
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