Pantera Partner: What to Expect in the Crypto Market After the Election?

Original Article Title: Post Election Thoughts

Original Article Author: Paul Veradittakit, Partner at Pantera Capital

Original Article Translation: Luffy, Foresight News

One week after the U.S. election, the cryptocurrency market sentiment remains strong. Polymarket, Bitcoin, and a potentially more efficient and crypto-friendly government are all worth looking forward to.

Polymarket

Polymarket is a prediction market based on the Polygon blockchain. During the election, its adoption saw a significant surge, with election betting volume reaching $3.2 billion, several orders of magnitude higher than before the election. Compared to other prediction markets, Polymarket charges no fees, supports seamless transactions, and is decentralized, meaning anyone can trade directly with the underlying on-chain contracts via API (allowing anyone to create trading bots), and anyone from a non-blacklisted region can access the website frontend.

Betting Volume on Polymarket

Despite a substantial drop in betting volume post-election, mainstream users have already tried and enjoyed using Polymarket over other centralized apps. A noticeable post-election phenomenon is the mainstream media's discussion of Polymarket's accuracy. Publications such as The Economist, The Wall Street Journal, and Forbes have referred to Polymarket as the largest prediction market and have used it to assess the difference between pre-election polling and post-election sentiment.

Hopefully, the enthusiasm for Polymarket can permeate a wider crypto ecosystem and inspire more crypto applications to emulate Polymarket's practices, striving for better usability, abstraction, and marketing.

Bitcoin and Altcoins

Bitcoin's price hit an all-time high, soaring to $77,000 immediately after the election and has since continued its upward trajectory, approaching $100,000. Altcoins indirectly related to the election also saw significant gains, such as altcoins on Solana. President Trump's election victory did not directly result in increased Bitcoin purchasing power, but his public support was enough to drive up the token.

Anticipation

The positive momentum that the election itself brought to the cryptocurrency industry may not persist indefinitely. However, the Republican unified majority in both the House and the Senate could mean a more efficient government and more cryptocurrency-related legislation being passed.

The number of representatives in both parties who support cryptocurrency is significantly greater than those who oppose it (266 to 120 in the House, 18 to 12 in the Senate). President Trump, who supports cryptocurrency, may either loosen regulation on cryptocurrency or push for supportive cryptocurrency regulation. World Liberty Financial is a cryptocurrency project being promoted by Trump and is said to operate as an instance of Aave, one of the largest DeFi protocols.

What does this mean for the future of cryptocurrency? Firstly, this could mean an increase in lobbying efforts (such as those from Ripple and Coinbase) to push cryptocurrency regulation in a friendly direction.

It is believed that regulatory uncertainty has been a longstanding issue in the U.S., and clear regulation could completely alter cryptocurrency companies' views on operating in the U.S. Most major cryptocurrency venture capital funds are still based in the U.S., so allowing funded cryptocurrency companies to operate in the U.S. could strengthen the industry.

Top DeFi protocols like Compound and Uniswap have also shown new interest in previously "prohibited" protocol functionalities (such as staking, fee conversion, etc.). Increased regulatory transparency around these functionalities may drive a new wave of innovation in the DeFi space.

Overall, I am very optimistic about the direction the cryptocurrency industry will take post-election. A unified opinion in both the House and the Senate could bring unexpected good news to the rapidly changing cryptocurrency industry.

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