“`html
The acceptance of crypto is speeding up under the Trump administration. The United States has risen as a pivotal entity in influencing the crypto market, both in terms of regulatory approaches and broader economic factors. The crypto market has started to align with US stock exchanges, illustrating an increase in institutional involvement and responsiveness to economic conditions. In its recent publication, HTX Ventures analyzes the execution of President Donald Trump’s crypto strategies, the prevailing liquidity of the US dollar, and its impact on the crypto markets.
How regulations are transforming crypto market cycles
Legal acceptance and dollarization are the pivotal foundational drivers of this cycle. Bitcoin emerges as the foremost benefactor, serving as an entry point for US institutional capital via ETFs, which reinforces the long-term credibility of the US crypto sector. The process of crypto acceptance in the US is predicted to yield a steady influx of favorable news and regulatory advancements.
The progression of US crypto policies is anticipated to extend throughout the duration of the second Trump term. Plans to fund major Bitcoin acquisitions, akin to the purchase of gold during the Great Depression, will necessitate fiscal adjustments. These actions might even incorporate the manipulation of negative GDP figures to rationalize monetary stimulus, as observed in previous instances, including 2008, 2020, and other economic turmoil periods. The US has not yet designated an official budget for national Bitcoin investments.
How the Strategic Bitcoin Reserve could revolutionize everything
In contrast to earlier cycles fueled by triggers such as the ICO surge in 2017 or the DeFi Boom of 2020, the current cycle is motivated by a regulatory transformation, including the SEC’s favorable outlook on crypto and the suggested Strategic Bitcoin Reserve.
The crypto market increasingly mirrors global macroeconomic trends, reflecting technology equities in their extended, more consistent cycles. In this cycle, Bitcoin displays a more substantial correlation with conventional financial markets, alongside exceptionally low volatility.
Institutional stakeholders have evolved into the main influencers of Bitcoin’s price fluctuations. This is evidenced by the open interest in CME Bitcoin futures, which surged from less than $4 billion prior to the sanctioning of ETFs to a stable level exceeding $10 billion, with peaks surpassing $20 billion.
Nonetheless, CME’s open interest might be augmented by institutional investors, who adopt leverage to profit from the discrepancy between spot ETFs and futures when the basis exceeds the US Treasury yield. Should these basis arbitrage measures unwind significantly, they could provoke sharp price declines through spot ETF withdrawals.
Implementation of Trump’s crypto policies
Recent measures enacted during the Trump administration have expedited the institutionalization of cryptocurrencies. The revocation of SAB 121 permitted conventional financial establishments to provide custodial solutions for crypto assets. Consequently, Citibank is actively considering the addition of crypto custody services, while JPMorgan Chase aims to extend crypto investment opportunities to its clients through a third-party custodian.
The FIT21 legislation and executive directives surrounding stablecoins have also established a framework for prolonged regulatory clarity. Although not yet enacted, FIT21 outlines the classification of digital assets. It divides them between the SEC and the CFTC based on decentralization levels: Highly decentralized tokens fall under the CFTC’s jurisdiction, while more centralized assets are overseen by the SEC.
Future projections indicate even more beneficial regulatory advancements for the crypto sector. While the US Strategic Bitcoin Reserve has recently been established, the active procurement of Bitcoin has not commenced, implying that a crucial growth driver may still lie ahead.
Simultaneously, legislation regarding stablecoins is projected to progress swiftly. The proposed GENIUS Act seeks to devise an all-encompassing regulatory framework for dollar-linked stablecoins, offering a legitimate pathway for banks, payment facilitators, and corporations. The Trump administration has previously backed the initiative enabling commercial banks to custody or issue stablecoins during its initial term.
This article does not include investment advice or recommendations. Every investment and trading action carries risk, and readers should conduct their own research when making decisions.
This article serves general informational purposes and is not designed to be and should not be construed as legal or investment advice. The views, thoughts, and opinions expressed herein belong solely to the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Cointelegraph does not endorse the content of this article or any products mentioned. Readers should conduct their own research prior to taking any action regarding any product or company mentioned and bear full responsibility for their decisions.
Source link
“`
