How Will the General Election Impact the Virtual Currency Market?
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Market
- Trump's support for cryptos like Bitcoin has boosted market confidence and investment enthusiasm. Since his election, a lot of capital has entered the market, with Bitcoin's price rising, e.g., to over $108,000 on Dec 17, and also driving up other cryptos' prices. Musk's long-term support for Dogecoin has also enhanced positive expectations, attracting more funds.
Regulation
- There's a trend of regulatory relaxation. Trump plans to nominate pro-crypto officials and fire the strict SEC chair. Coinbase's senior policy director expects Congress to pass relevant legislation for a better legal framework. Despite possible relaxation, regulatory systems will be established to ensure market stability and standardize the industry, such as the "Financial Innovation and Technology Act of the 21st Century" and the "Payment Stablecoin Clarity Act".
Industry Status
- The support from Trump and Musk has increased the mainstream recognition of virtual currencies, attracting more institutions and individuals. Traditional financial institutions may get more involved, like launching Bitcoin ETFs to promote integration with the traditional market.
Technology
- The positive market and policy environment will attract more resources for R & D, promoting innovation in blockchain and encryption algorithms, improving the security and efficiency of virtual currencies and expanding their application scenarios, such as in cross-border payments and supply chain finance.
Risks
- The market is volatile, and Trump and Musk's actions may exacerbate fluctuations, bringing price risks and instability. Regulatory policies are uncertain. If not as expected, the industry may be restricted and investors' interests damaged. Competition will intensify, challenging the capabilities of virtual currency enterprises, and some may be eliminated.