Inauguration Edition: A New Reality

Trump's election has increased investor confidence among institutions, helping to elevate digital assets as a mainstream asset class. The question remains if this is a long-term shift or just a temporary response, says CCData’s Joshua de Vos.

Updated Jan 22, 2025, 4:41 p.m. UTCPublished Jan 22, 2025, 4:37 p.m. UTC

The election of Donald Trump promises a new era for digital assets characterized by greater regulatory certainty and a surge in market activity. The question now is whether this shift is sustainable, or a temporary reaction to the political climate.

According to CCData’s latest Exchange Review report, aggregated spot and derivatives volumes, the most common measure evaluated for market participation, recorded a new yearly high in 2024, greatly exceeding the previous record set in 2021 ($75 trillion vs $64 trillion). With the election driving market activity and speculation, November and December were both record-breaking months for volumes, with $10.51 trillion and $11.31 trillion in monthly volumes, respectively. For context, the 2024 average (the biggest year on record) was roughly $6.4 trillion.

You're reading Crypto Long & Short, our weekly newsletter featuring insights, news and analysis for the professional investor. Sign up here to get it in your inbox every Wednesday.

Concurrently, stablecoins reached a total market cap of $210.1 billion, its highest ever point, on inauguration day, according to DeFiLlama. This reflects a YTD increase of 3.3% thus far, on the back of improved liquidity conditions across both centralized and decentralized exchanges, supporting the influx of fresh volumes seen in the last few months.

Assets “made in the USA” have been doing particularly well. These have been an outlier since the election, where a permissive regulatory environment, and the promise of more favourable conditions for US-based assets, have generated significant investor interest and speculation. Coins such as XRP, SOL, XLM and ALGO, which have a strong U.S.- affiliation, have seen outsized returns. Per CCData, the basket associated with these coins is up over 360%, outpacing the market by a sizeable margin. This marks an about-turn from the previous administration's regulatory clampdown, which kept these under scrutiny for many years as they were ultimately deemed securities by the SEC.

Whether this unprecedented growth continues will depend heavily on the new Trump administration’s execution of its promises on a Strategic Bitcoin Reserve, incentives for domestic bitcoin mining, and other issues. The broader market may also benefit as we enter into the expansionary phase of the bitcoin four-year historical cycle, which tends to see explosive growth in the final year.

It will be interesting to see whether this new administration will impact the market cycles to which the cryptocurrency sector has grown accustomed, or whether it will mark a significant departure from historical trends.

Joshua de Vos

Joshua de Vos has nearly a decade of experience in the digital asset sector and currently leads CCData’s award-winning research team. Previously, he was Head of Research at a leading digital asset portfolio manager, where he developed foundational investment strategies. Joshua is passionate about the intersection of traditional (TradFi) and decentralised finance (DeFi) and the potential of DeFi to revolutionise the financial sector. At CCData, an affiliate of CoinDesk, Joshua has launched numerous research reports and played a key role in developing the first institutional-grade Environmental, Social, and Governance (ESG) Benchmark. He has participated in discussions on Stablecoins, CBDCs, and ESG considerations with leading industry figures and regulatory bodies. Joshua has also been featured on CNBC’s Bitcoin Halving podcast, CoinDesk’s U.S. presidential inauguration livestream, and in top-tier media such as Bloomberg, Forbes, and the Financial Times.