Zinger Key Points
- Trump’s potential replacement of SEC Chair Gary Gensler could facilitate more compliant token listings and value redistribution.
- Kala predicts a "crypto summer" attracting new investors due to aggressive token sinks via burn or revenue share mechanisms.
Pratik Kala, Head of Research at investment management provider DigitalX Limited predicts a Trump victory in the upcoming election but cautions against expectations of immediate crypto-friendly regulations.
What Happened: According to Kala, President Biden failed to meet the crucial objective of appearing “lively and energetic” during the debate, a factor he believes has made it “clear that Trump will win.”
Despite the potential for a Trump presidency, Kala suggests that cryptocurrency regulation may not be an immediate priority.
He points out that the total crypto market capitalization is still relatively small compared to major corporations, and a president’s time is typically focused on “big swings.”
Kala anticipates that market participants may “front run” the potential for crypto-friendly policies under a Trump administration. Investors are hoping for favorable regulations, changes in SEC leadership and the promotion of a pro-crypto SEC chair.
These changes could potentially allow for compliant token listings and increased value for token holders.
Kala predicts that incumbent cryptocurrencies with large market shares and consistent revenue streams are likely to benefit most from this scenario.
He also suggests that high fully diluted valuation (FDV) coins may need to reconsider their tokenomics to remain competitive.
Also Read: Why Bitcoin Could Plunge To $55K: 10x Research
Why It Matters: Looking at the broader economic picture, Kala notes that a Trump presidency could lead to ending ongoing wars, potential rate cuts and the reallocation of funds currently parked in money market funds.
These factors could be a “major catalyst” for significant growth in the crypto market cap, with Kala giving a “50% chance” of reaching the often-discussed $10 trillion market cap during a Trump presidency.
However, Kala also highlights potential risks, including the possibility of renewed inflation due to Trump’s economic policies. He warns that if inflation leads to significantly higher living costs, it could result in serious economic and social challenges.
In conclusion, while a Trump victory could serve as a catalyst for crypto prices, Kala advises against expecting immediate regulatory changes.
He suggests that it could take up to 12 months after the election before any significant policy shifts occur.
As the cryptocurrency landscape continues to evolve in response to political and economic factors, industry stakeholders are keenly watching these developments.
For those seeking deeper insights into the interplay between politics, economics, and digital assets, the upcoming Benzinga’s Future of Digital Assets event on Nov. 19 promises to be a valuable forum.
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