The U.S. 2024 election cast a shadow over almost everything leading up to November 5th as the world anxiously awaited the outcome. However, with a definitive Trump victory, the industry is turning its eyes toward next year. Geopolitical tension, new regulations, technical innovations, and countless other factors promise to make it an interesting year.
In this article, we’ll look at what’s on the docket for the new year, trends to keep an eye on, and how to position your portfolio for success.
Lighter Crypto Regulations
The most significant change in the new year will be lighter crypto regulations as the Trump administration takes over. During his campaign, Trump promised to replace SEC Chairman Gary Gensler immediately, create a federal crypto reserve, and make the U.S. the “crypto capital of the world”—presumably through lighter regulation.
Bitcoin certainly applauded Trump’s victory by jumping to nearly $100,000. Source: CoinMarketCap
Trump hasn’t disclosed who he wants to replace Gary Gensler as of this writing, but ex-SEC Commissioner Paul Atkins, current SEC Commissioner Mark Uyeda, former CFTC Chairman Heath Tarbert, Robert Stebbins, and others are contenders. The common thread is that all support crypto assets much more than the outgoing Chairman.
While the idea of a federal crypto reserve is far from certain, advocates within Trump’s inner circle are pushing to create something like the National Petroleum Reserve to purchase one million bitcoins over a prolonged period. These aspirations could be part of the reason Bitcoin, in particular, has seen such a tremendous rise.
Finally, Trump’s election could force Republicans opposed to crypto to fall in line and support reforms in the Senate. For instance, the House passed the Financial Innovation and Technology for the 21st Century Act in May with bipartisan support, but the bill floundered in the Senate, where crypto assets don’t enjoy as much support.
Crypto Around the World
The U.S. isn’t the only country interested in crypto. From El Salvador’s Bitcoin reserves to global mining operations, cryptocurrencies play a growing role in the global economy. And the U.S. jumping on the bandwagon could lead more countries to explore doing more of the same, particularly as wars, inflation, and other factors hurt some national currencies.
El Salvador’s Nayib Bukele made a big bet on Bitcoin in 2019, making it legal tender in 2021 and building up a reserve that’s now worth over a half billion dollars. While controversial policies (like imprisoning 2% of the population) have caused some concerns, the country could become a role model in the crypto sphere.
Meanwhile, other countries experiencing rampant inflation or other economic issues have turned toward crypto. For many Venezuelans, peer-to-peer crypto trading has become more reliable than local money changers for sending money. Russia’s finance minister also sees crypto as essential for cross-border transactions in its sanction-laden economy.
Other countries have dug in against crypto. In September, China imposed a blanket ban on all crypto transactions and mining. Chinese government agencies believe that crypto speculation could disrupt the country’s economic and financial order, which is among the country’s top priorities when managing its people.
New Technical Innovations
The crypto industry continues to innovate at a rapid pace—especially compared to the anemic broader financial sector. For instance, decentralized finance (DeFi) continues to push the boundaries of what’s possible without financial intermediaries, while non-fungible tokens (NFTs) are quickly expanding beyond artwork into areas like identity management.
Polymarket lets people bet on binary outcomes while providing predictions to the broader market. Source: Polymarket
Prediction markets are likely to continue being one of the most successful innovations. For instance, Polymarket already processes billions in bets every month and notoriously predicted the U.S. presidential election better than most statistical models. These capabilities could make it attractive to both gamblers and statisticians alike.
Many crypto platforms will also continue pushing to become more user-friendly and attract mainstream customers. Gone are the days of remembering lengthy crypto addresses or transacting through multiple exchanges to get the token you want. Instead, centralized and decentralized platforms could streamline the entire process from start to finish.
But, of course, hackers and fraudsters will also continue to innovate. The number of exchange hacks is likely to continue rising while crypto crimes aren’t going away anytime soon. Meanwhile, crypto mixers and other projects promoting anonymity—regardless of any costs—could see more uptake amid lighter regulations.
Growing Mainstream Adoption
Crypto prognosticators are always predicting mainstream adoption just over the horizon. But, of course, crypto remains pretty niche throughout the United States and most countries around the world—at least as a payment mechanism or major investment. That said, there are some signs that adoption rates continue to grow.
More favorable regulations could help accelerate the availability of crypto ETFs. While spot Bitcoin and Ethereum ETFs already exist, easing the rules could permit ETFs to cover more significant swaths of the market, enabling investors to diversify their exposure. And inflows to these funds could favorably affect crypto demand and deepen the market’s liquidity.
At the same time, lighter regulation could open the door for more consumer-friendly platforms to provide DeFi services. For instance, companies like Coinbase have already started to offer some products, to the chagrin of the SEC. However, if the SEC takes a more favorable view, DeFi could become more accessible to the public.
Preparing Your Portfolio
The crypto industry could see a lot of change over the coming year, so it’s critical to position your portfolio for success.
Tracking and compliance are a great starting point for any portfolio. With platforms like ZenLedger, you can monitor your crypto investments across wallets and exchanges in one place. Even better, you can automate the process of determining how much tax you owe and generating the paperwork you need to file each April.
ZenLedger makes it easy to aggregate transactions across wallets and exchanges. Source: ZenLedger
In addition to compliance, it’s a good idea to maintain diversification across different cryptocurrencies and crypto assets. It might be tempting to go all-in in the latest initial coin offering (ICO), but you can almost always achieve better risk-adjusted returns by limiting the risk of any single crypto project going under or moving substantially lower.
The Bottom Line
The U.S. 2024 election promises to have a massive impact on the crypto industry over the next four years—but it’s far from the only thing happening in the space. From technological innovations to evolving geopolitics, the industry continues to experience rapid change thanks to a variety of catalysts set for 2024, 2025, and beyond.
If you trade crypto, ZenLedger can help you organize everything for tax time. Our platform aggregates transactions across wallets and exchanges, computes your capital gains or losses, and generates the tax forms you need to file. You can even spot opportunities to harvest tax losses and reduce your year-end tax bill.
This material has been prepared for informational purposes only and should not be interpreted as professional advice. Please seek independent legal, financial, tax, or other advice specific to your particular situation.
