Crypto for Advisors: Post-Election Review

Subsequently, Eric Tomaszewski, representing Verde Capital Management, takes on the task of addressing questions regarding potential effects of these alterations on financial advisors within the Ask an Expert forum.

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A Week After the Election: Can Optimism Lead to Wider Adoption?

After a week from the election, the mood towards cryptocurrencies continues to be optimistic. With Polymarket, Bitcoin, and a potential government that could be friendlier towards cryptocurrencies on the horizon, there’s much to anticipate for crypto enthusiasts.

Polymarket

During the election period, usage of Polymarket, a predictions market based on the Polygon blockchain, skyrocketed, reaching over $3.2 billion in bets placed on the election – significantly more than previous volumes. Unlike other prediction markets, Polymarket does not charge fees, makes trading simple and flexible, and is decentralized. This means that users can trade directly with the underlying contracts using the API, enabling the creation of trading bots, and anyone from a non-blacklisted region can access the platform’s user interface.

Polymarket Open Interest

Despite a significant drop in open interest following the election, there’s a widespread perception among mainstream users that they’ve had positive experiences using Polymarket compared to centralized alternatives. One clear advantage post-election is the increased discussion about Polymarket’s accuracy by major media outlets. Notable publications like The Economist, The Wall Street Journal, Forbes, and others have recognized Polymarket as the largest prediction market and used it to analyze discrepancies between polls and actual voting trends both before and after the election.

It’s desirable that Polymarket’s energy spreads throughout the wider cryptocurrency community, encouraging other crypto applications to follow Polymarket’s approach as they strive for improved user-friendliness, abstraction, and marketing strategies.

Bitcoin and altcoins

Bitcoin has soared to an unprecedented peak of more than $87,000, reaching a temporary dip at around $77,000 following the election and climbing steadily since then. Similarly, altcoins associated with the election, such as those on Solana, experienced a surge in value. Although the Trump Presidency itself did not instigate increased bitcoin buying activity, his public endorsement was sufficient to spark a rally in these cryptocurrencies.

Looking forward

The favorable winds in cryptocurrency following the election might weaken somewhat within a month. Yet, if the Republicans manage to secure a united majority in both the House and the Senate, it could lead to a more efficient government capable of passing more laws related to cryptocurrency.

Crypto election updates from StandWithCrypto

A larger number of representatives, who are supportive of cryptocurrencies rather than critical, have been elected into office (266 pro-crypto vs. 120 anti-crypto in the house, 18 pro-crypto vs. 12 anti-crypto in the senate). Additionally, it’s expected that President Trump may take a lighter approach to crypto regulation or even advocate for regulations that are favorable towards cryptocurrencies. The World Liberty Financial project, which is backed by Trump, claims it will operate similarly to Aave, one of the biggest Decentralized Finance (DeFi) protocols.

Moving forward, it could imply an escalation in advocacy activities, such as Ripple and Coinbase possibly intensifying their efforts to shape the language of cryptocurrency regulations. This could involve influencing the direction these regulations take.

It’s widely held that the regulatory landscape in the U.S. has been somewhat ambiguous, and if it were made clearer, it could significantly shift perspectives on doing business within the U.S. Notably, many of the leading cryptocurrency venture capital firms reside in the U.S., which means that allowing funded companies to operate within this jurisdiction might fuel the industry’s growth, thereby bolstering the domestic crypto market.

There’s been a buzz among leading DeFi platforms such as Compound and Uniswap about integrating hitherto unavailable features like staking, fee-shifting, and others. Providing regulatory guidance on these aspects could prompt companies to develop innovative solutions within the decentralized finance realm.

All things considered, I’m incredibly hopeful regarding the trajectory of the cryptocurrency sector, particularly following the elections. With a united House and Senate, we might see some surprising advantages in this rapidly evolving field.

– Paul Veradittakit, managing partner, Pantera

Ask an Expert

Q: Could blockchain-based prediction markets redefine participation in elections?

Yes. Many people are frustrated with the media’s pageantry, preferring straightforward results.

Prediction markets might attract more participation, especially from younger, technology-oriented people who favor data-based perspectives akin to stock exchange alerts, rather than news-centric stories.

Q: What does the election mean for crypto and blockchain tech?

The surge of Bitcoin above $80,000 demonstrates an increased enthusiasm and belief that the United States will spearhead the advancement in this digital arena.

In simpler terms, a Congress controlled by the Republicans might push for laws favorable to cryptocurrency. Additionally, there could be adjustments in who oversees these regulations, changes in leadership due to executive actions, and strategic moves aimed at promoting the crypto sector.

Q: How does a financial advisor view prediction markets?

Prediction markets offer a wide range of collective viewpoints and consistently updated odds, boosting the effectiveness of information. This feature is useful in helping clients make informed decisions by providing them with immediate insights. By using these platforms, clients can access more chances to clarify information and increase its worth.

– Eric Tomaszewski, financial advisor, Verde Capital Management

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