- US presidential elections have turbo charged the crypto market, with record flows and price moves.
- US regulations on crypto could ease and a US Strategic Bitcoin Reserve may be set up under Trump.
- Decentralized prediction markets have attracted attention during US elections.
- Nakamoto trust via blockchains have been shown as expensive to maintain.
- CBDCs continue to gain traction, even if a real-time rollout is not imminent in most jurisdictions.
US presidential elections have turbo charged the crypto market, with record flows and price movements both before and after the results. Institutional and retail investors alike appear to be taking the plunge. The developments should be seen in the extraordinary context of the election, where both Republicans and Democrats sensed the strong support for crypto assets among young Americans. Both parties also felt the strength of the crypto lobby to fund the campaigns. Many well-known crypto backers supported Donald Trump in this election, and we are sure they are expecting some payback from the president-elect in terms of deregulation (at least) and crypto purchase (if there is indeed going to be a Bitcoin strategic reserve).
Breathless price targets are being proclaimed for a wide range of cryptocurrencies, while position taking on spot and futures have soared. The spike in flows makes us a tad nervous, as such spikes tend to come with two-way volatility. Regulators would need to be cautious about the risks to retail investors, especially as crypto ETFs have proliferated this year.
We also analyse recent developments in the central bank digital currency space. CBDCs continue to gain traction, even if a real-time rollout is not imminent in most jurisdictions.
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