Trump's Victory, New BTC All-Time High, DeFi Renaissance and Record ETF Flows

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This Week’s Top Stories

“Donald Trump elected 47th President of the United States” – Wednesday, 6 November

• Donald Trump was officially declared the 47th president of the United States on Wednesday, according to the Associated Press. Trump has won all swing states so far, with Nevada and Arizona still pending at the time of writing, Trump is projected to win these two as well, putting his count of electoral votes above 300, with 226 for Kamala Harris. Trump has also won the popular vote.
• In the election, at the time of writing, 266 pro-crypto candidates won seats in the House of Representatives, compared to 120 anti-crypto members according to data from Stand With Crypto. The Senate also leans toward crypto, with 18 supporters and 12 opponents. With the House and Senate both leaning pro-crypto, the path to favorable legislation could be smoother.
• On Trump's election day, Eric Balchunas, ETF analyst at Bloomberg, tweeted that BlackRock IBIT had just seen its largest trading volume ever, with a trading volume of $4.1 billion.
• On the day of the U.S. election, CME Bitcoin futures trading volume hit a record high yesterday, reaching $13.15 billion. The total exchange options trading volume reached $9.74 billion, a record high, of which Deribit accounted for 77.85%.

“Bitcoin reaches a new All-Time High above $76’000!” – Wednesday, 6 November

• On Wednesday early morning, Bitcoin reached a new all-time high Bitcoin reached a new all-time high when the first numbers from the U.S. elections showed a clear Trump lead. Bitcoin and the broader crypto market continued to trade to the upside alongside U.S. equities, and BTC managed to reach a new high above $76’500 on Wednesday evening CET.

“State of Michigan's state pension fund discloses over $10 million worth of Ethereum ETF holdings” – Monday, 4 November

• The State of Michigan Retirement System recently disclosed that it has held more than 460’000 shares of the Grayscale Ethereum Trust, worth at about $10 million. The pension fund previously disclosed owning bitcoin spot ETFs worth roughly $7 million. U.S. states and pension funds are increasingly showing interest in crypto products, as the State of Wisconsin Investment Board revealed in May, that it held $100 million in bitcoin spot ETFs, and the state of Florida just recently disclosed owning $800 million in crypto-related investments.

“French betting man wins $50 million on Polymarket after Trump Win” – Wednesday, 6 November

• Frenchman Théo used four anonymous accounts to place bets on Polymarket, betting more than $30 million and won nearly $50 million with his bets on Donald Trump. He not only predicted that Trump would win the presidential election, but also bet that he would win several key swing states. According to Chainanalysis, he even netted more than $78 million in profits across nine different accounts.

“Powell: Economy is strong overall” – Thursday, 7 November

• The Federal Reserve cut its interest rate by 25 bps, which came in line with expectations. At the press conference following the interest rate decision, Fed Chairman Powell stated that they are seeing easing inflation, a robust labor market, and an overall strong economy. Powell also said that U.S. elections do not impact their policy decisions, at least not in the short term. In response to a journalist’s question about whether he would agree to resign if asked by the President, Powell replied that he would not.

A Quick Crypto Overview: New All-Time High!

Recent price action has been signaling an explosive move to the upside, and crypto participants have been betting on a Trump victory over the past few weeks. While some de-risking was visible in the markets a few days before the election, bitcoin and major crypto assets held their levels and traded strongly into the U.S. election decision night (CET). Trump took an early lead, and as mentioned several times in recent editions of the Weekly Wrap, the crypto market began surging early Wednesday morning. The total market cap increased by nearly 10 percent on Wednesday alone, with Ethereum closing up more than 12 percent and Bitcoin gaining over $6,000 (9 percent) on the day of Trump’s win.

At the time of writing, bitcoin is trading just below $76’000, Ethereum just below $3’000, and Solana just under $200. MSTR reached a new all-time high yesterday above $280, COIN is above $250, and Bitcoin mining stocks are also trending upward – is this the Trump effect?

Chart of the Week: DeFi Renaissance?

While most of crypto traded to the upside on Wednesday following Trump’s victory, DeFi coins truly stole the show. Protocols such as Uniswap, Aave, Raydium, Lido, and Ethena are up between 20 and 50 percent this week, as investors anticipate a “golden age” for DeFi with Trump as President due to expected deregulation and a more crypto-friendly approach from the U.S. government. As Donald Trump has promised to fire the current SEC chair, Gary Gensler, optimism has been fueled that a more crypto-friendly appointee could enable long-debated and awaited fee switches to finally be activated, unlocking new value for governance token holders.

What’s Happening On-Chain? Polymarket

This week, we want to highlight the accuracy of bettors on Polymarket regarding the outcome of the U.S. election. Not only did Polymarket users predict Donald Trump’s victory, but they also forecasted his win in all seven swing states, as shown in the chart below from October 25, 2024.

When looking at the actual outcome of the election, it becomes clear that Polymarket predicted every single state correctly, as shown in the map below. Polymarket has been mentioned in mainstream media over the past few months, with most reports suggesting that it likely does not provide a representative view of actual events, since Polymarket users are relatively homogeneous. However, recent data shows this was not the case, as Polymarket users predicted the election results with high accuracy.

Digital Asset Fund Flows: Pre-Election Euphoria

Digital asset investment products saw inflows of $2.2 billion last week, pushing total assets under management to over $100 billion for the second time in history, matching levels seen in early June this year. While the U.S. saw most of these inflows, countries such as Switzerland, Canada, Brazil, and Sweden experienced net outflows last week. Bitcoin was almost the sole beneficiary, with inflows amounting to $2.2 billion, while Ethereum saw net inflows of $9.5 million.

Let us take a look at VC funding in the month of October. According to RootData, 95 crypto VC investments were announced publicly in October, down 3 percent from September but up 16 percent year-over-year. October’s total funding reached $780 million, a 28 percent increase from September and a 73 percent increase year-over-year.

IBIT with a Record of $1.1 billion of Daily Net Inflows

While this week started on a negative note with around $700 million in net outflows for bitcoin spot ETFs over the first three days, Wednesday saw a strong rebound, with $620 million flowing back into bitcoin products. Thursday then broke all records: IBIT saw $1.1 billion in daily net inflows, and bitcoin spot ETFs saw nearly $1.4 billion in net inflows in a single day—the highest on record.

Ethereum spot ETFs started the week with $60 million in outflows on Monday but rebounded with $50 million in net inflows on Wednesday and $80 million on Thursday.

The flows into spot ETFs are something to watch over the coming weeks, as the total inflows into risk-on ETFs reached $22 billion on Thursday—a level that, according to Eric Balchunas, is typically seen over the course of an entire week.

Market Sentiment: Post-Election Euphoria?

While the market experienced some pre-election euphoria as mentioned above, investors, after a brief risk-off period in the days leading up to Election Day, were hit with a fresh wave of post-election euphoria once Donald Trump was confirmed as the 47th U.S. President. Not only did the crypto markets surge to the upside, but the S&P 500 also recorded its highest daily increase since 2022, trading just below 6,000 for the first time in history.

The CNN Fear and Greed Index for the stock market is sitting in Greed territory (59) and the crypto index is reflecting this sentiment, also in Greed (75). AAII investors answered in the weekly survey that 41.5 percent feel bullish for the stock market in the next six months, a slight increase from end-of-October levels (39.5 percent were bullish) but still below the highs of early October. The sentiment for the stock market indicates that there might be some room left to the upside, at least in terms of market sentiment.

Other Relevant News

• Cartwright, a UK pension advisor, announced a 3% Bitcoin allocation ($59m) into the investment portfolio of a pension scheme. – Link
• OpenSea CEO Devin Finzer said that one year after the release of OpenSea 2.0, the platform will be from the ground up. The new platform will be launched in December. – Link
• Swift, UBS and Chainlink announced the completion of a pilot to settle tokenized fund subscriptions and redemptions using the Swift network. – Link
• The Bank of England cut its benchmark rate by 25 basis points, from 5% to 4.75%, in line with market expectations. – Link
• In October 2024, Solana network fees denominated in U.S. Dollar reached a total of $69.11 million, exceeding the $66 million in March 2024, setting a record high. – Link
• Detroit city officials announced Thursday that the city will become the largest U.S. city to accept cryptocurrency payments. – Link

Looking Ahead: It’s Looking Bright

With the U.S. election now in the past and Donald Trump elected as President, the future looks bright for the crypto markets in the months to come. Many investors are anticipating deregulation and a more pro-crypto U.S. government, with new appointees likely; especially, Gary Gensler’s job is, let’s put it this way, less safe than it was a couple of days ago.

While it remains to be seen how many of his promises Donald Trump will actually bring to life –such as his promise to make Bitcoin a reserve asset of the U.S. government – and how this could impact the broader markets, nonetheless, the market is reacting rather positively to Trump’s victory, as U.S. equities are trading at record highs and huge amounts of cash are flowing into risk-on assets.

Bitcoin seems to be on track to finally leave the trading range of the last few months behind and explore new heights, as it is currently trading above the previous all-time high from March 2024.

Only time will tell where the journey goes, but crypto enthusiasts and traditional investors seem to agree on the bullish outlook following Donald Trump’s election and Jerome Powell’s remarks on the economy last night.

Below, you can find some of the key data releases and events to watch out for next week.

Tuesday, 12 November 2024

• Japan – PPI

Wednesday, 13 November 2024

• U.S. – CPI, Core CPI

Thursday, 14 November 2024

• Eurozone – GDP
• U.S. – PPI, Core PPI
• U.S. – Initial Jobless Claims
• Japan – GDP

Friday, 15 November 2024

• Switzerland – PPI