Bitcoin is on a bull run, but significant work remains for crypto advocates
Since the election results that will see former President Donald Trump return to the White House in January 2025, the crypto marketplace has been on a tear, with bitcoin soaring to fresh all-time-highs of over $90,000 in the week following the election. Social media and even the press releases of Congresspeople and Senators are increasingly mentioning the likelihood of a strategic bitcoin reserve becoming reality sooner rather than later. Such enthusiasm is reminiscent of previous bull runs, with the only exception being that the market is now also supported by institutional buyers of bitcoin versus a mainly retail driven rally.
In addition to the price run-up in bitcoin, the optimism and bullish sentiment has extended to other aspect of the crypto landscape. Following significant moves by PayPal into the stablecoin and crypto payment sectors during 2024, the U.S. Treasury included over 20 pages of documentation explaining the benefits and appeal of stablecoins – and tokenized Treasuries – to U.S. financial markets and wider financial stability. Even with all of this positive sentiment and activity, however, there seems to be a feeling that these are just the opening ripple effects of a much wider bull market set to begin.
As always, investors and crypto advocates need to be able to parse through what the market action is noise, what is based on fundamentals, and which aspects of this recent run might be beginning to exhibit bubble-like tendencies. Let’s take a look at a few of the items that crypto investors and policymakers should stay focused on even as bitcoin and other tokens continue to reach fresh all-time highs.
Regulatory Progress Must Continue
One of the most easily quantifiable benefits of the upcoming change in administration – at least as far as the crypto sector is concerned – is the expectation that the U.S. regulatory apparatus pivot to a more pro-crypto approach. Starting with the expected removal/resignation of SEC chairperson Gary Gensler, investors are (correctly so) optimistic that the new regime will be more amendable to cryptoassets. As optimistic as these sentiments are, however, investors and policy advocates alike must remain focused on ensuring that a positive and forward looking regulatory environment actually comes to pass.
Specifically, with the expectation of pro-crypto Congress being sworn in alongside the new administration, the industry has an opportunity to develop and hopefully pass pro-crypto legislation. Pronouncements and positive social media posts and interaction are excellent tools to change the narrative, but legislation will require a persistent and level-headed approach toward regulatory processes and the expected speed of change.
Stablecoin Integration Is Paramount
As high flying as crypto markets are the reality is that a very small percentage of Americans actually utilize crypto as a medium of exchange. According to 2024 research by the Pew Center only 17% of U.S. adults have ever invested, owned, or used cryptoassets, a percentage that remains unchanged since 2021. Additionally, of those surveyed 63% reported having little or no confidence that that current options available for undertaking any of the previously mentioned activities are trustworthy. Given that stablecoins are the only purpose-built cryptoassets designed to be used as a medium of exchange via the connection between the tokens and fiat currencies such as the USD, recent news regarding stablecoins are being correctly noted as positive forward progress.
That said, while the stablecoin marketplace is rapidly approaching $200 billion in market capitalization, data reported by Chainalysis should serve as a reality check for crypto proponents. According to the report the U.S. ranks 4th globally in terms of total crypto adoption, with even that ranking being driven by institutional investors and traders (as determined by transactions of $1 million or higher), and that stablecoin adoption seems to have stalled.
It remains to seen what, if any, actions the incoming Trump administration will take to encourage stablecoin adoption or foster further development, but stablecoins should remains a focus for policymakers seeking to grow the overall crypto market.
Investor Education Is Critical
One aspect that can easily be overlooked in the discussion and hype that has accompanied bitcoin and other cryptoassets recently is that, for a large percentage of the investing public and retail investors, the value proposition and the mechanics for how crypto functions remains a mystery. While Congress will be receiving a large number of pro-crypto members, with these members also being well-educated on the subject, more mainstream and entry-level education is necessary. Especially with the influence of social media platforms, alongside the very real dangers posed by memecoins and other tokens that lack economic merit, the crypto industry should take the question of investor education seriously. A better informed investor community, on top of representing a worthwhile goal in and of itself, will also make it simpler to root out fraud, bad actors, and other activities that could cause economic distress and damage.
Bitcoin price appreciation is worth of celebration, but should not overshadow the important work that remains.
