To Infinity and Beyond
Happy Veteran’s Day. I have today day off so a) I can truly appreciate the sacrifices that so many people have made for this amazing, crazy, beautiful, dynamic country that I love and b) finally write a new update. It’s certainly been an eventful month for crypto and I sense it’s only just beginning so let’s catch up on some of the bigger implications from last week’s election.
🟢 Crypto Drives the Bus
Crypto may not have swung this election, but this was definitely a turning point in the industry flexing its strength. In what looked to be a close election, the Trump campaign identified that there may be pockets of voters that felt so passionately about crypto that they could be single-issue voters. I suspect that most of these people leaned Republican anyway, but last May, Trump started coming out as pro-crypto. After testing the waters for a while, he leaned more and more into it as the campaign went on. His World Liberty coin launch bombed hard, but it was certainly the first time a major Presidential candidate shilled a crypto “sh*&coin” three weeks before the election.
What will stand out, however, was all of the action downballot. Fairshake, the leading crypto PAC, raised $204 million in this election cycle putting it near the top of the tables in resources. They were massively successful. Bloomberg reported that Fairshake was 48 for 48 last Tuesday (with 5 races still outstanding). That’s a remarkable hit rate.
The effect was most notable in the Ohio Senate race. Sherrod Brown who has been, next to perhaps only Elizabeth Warren, the most anti-crypto American politican. Brown was the architect of Chokepoint 2.0, a series of un-legislated, un-approved and largely secret policies designed to debank any business that touched crypto. Fairshake and other pro-crypto PACs spent more than $40 million to target Senator Brown and the Ohio race drew more ad spending than any other Senate race. Brown, a three-term incumbent who had served Ohio for 50 years, ended up losing by about three points to a Cleveland car dealer.
The funding wasn’t all on the Republican side, however. In other races crypto supported Democrats, helping both Elize Slotkin and Ruben Gallego win close Senate elections in Michigan and Arizona. In fact, Fairshake supported an even number of Democratic and Republican Congressional candidates. Oh, and apparently, Fairshake has already raised $78 million for the 2026 mid-terms.
The message has become clear: cross crypto at your own peril.
🟦 Regulatory 180 Inbound
A Trump victory alone would have been a big win for crypto, but with a Republican sweep combined with PAC dollars to spend, the regulatory environment will shift dramatically very quickly.
Under Gary Gensler, the SEC has been strongly anti-crypto. In the last four years, the SEC has gone consistently gone after the “good players,” suing or threatening Coinbase, Kraken and Robinhood, who have at least attempted to be in compliance. Meanwhile, the SEC went after a handful of influencers while having made no attempts to stop true scams like FTX and Luna.
Trump has vowed to remove Gensler on “day one” and whether or not he truly has that ability, there will certainly be dramatic changes at the SEC. That alone would be bullish for crypto, but there will also be a very different legislative environment. I wrote last May about the much more positive shift in Congress’ approach to crypto and a handful of key votes that portended a change in policy. Now, it seems virtually certain that there will be new comprehensive legislation for crypto to provide clearer rules and less regulation by enforcement. I suspect that Sen. Lummis’ proposal to establish a “strategic Bitcoin reserve” which would hold 1 million Bitcoin (~$90 billion worth) is unlikely to go anywhere, but that fact that it’s on the table is symbolic.
While the U.S. has gone backwards in the last four year on crypto policy, the rest of the world has continued to move forward. A highly respected study showed that the U.S. has steadily lost share in the global market for crypto developers. While 25% of crypto developers in 2021 were based in the U.S., that number has fallen to 18% now. Crypto companies have steadily moved out of the U.S. under the Gensler regime. Look for that to reverse now.
◆ Coiled & Ready
It’s hard to get this far without at least mentioning the price impact. Bitcoin is up 40% in the last month and its ascent, for the moment, seems mostly limited by how often you refresh:
I’ve written a lot about the impact of ETFs on this market, but I think the existence of liquid, easily investable vehicles is a dramatically different trigger this time. In past crypto rallies, a) the tech still seemed weird and early and b) it was still a pain to move money to Coinbase to buy a bit of Bitcoin. Now, crypto seems less likely to be a blip and buying Bitcoin or ETH is just a click away on Robinhood. For the old school crowd, it feels like the phones at E.F. Hutton have been lighting up all day today with investors bitching about their financial advisors not having gotten them into IBIT earlier.
Indeed, the three days post election saw $2.3 billion in inflows to Bitcoin ETFs. Less than one year after launch, the Bitcoin ETFs have $84 billion in AUM, roughly 2/3 of all Gold ETFs.
On the economic front, we seem to be moving back to a “risk-on” environment with also a higher probability of increased inflation. Both of these will likely make Bitcoin more appealing as well as attract additional attention to the other parts of the crypto universe that are growth oriented.
Anecdotally, one of my most crypto skeptical friends asked today if he had “missed the boat” on crypto and I had to reply with the old proverb: “The best time to plant a tree was 20 years ago. The second best time is now.”
Today’s Freezing Cold Take
Peter Zeihan on Joe Rogan: “I’m not gonna say it’s all fraud, some of it was a pyramid scheme. What’s Bitcoin at? $16,000? It has another $17,000 to go down:”
