Pantera Partners: What to Expect from the Crypto Market After the Election?

Original Title: “Crypto for Advisors: Post-Election Review”

Author: Paul Veradittakit, Partner at Pantera Capital

Compiled by: Luffy, Foresight News

A week after the U.S. elections, the sentiment in the cryptocurrency market remains strong. Polymarket, Bitcoin, and potentially more efficient and crypto-friendly governments are all worth looking forward to.

Polymarket

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

Betting amounts on Polymarket

Although the betting amounts have significantly decreased after the elections, mainstream users have tried and preferred using Polymarket over other centralized applications. A notable phenomenon post-election is the discussion of Polymarket's accuracy in mainstream media. Publications like The Economist, The Wall Street Journal, and Forbes have referred to Polymarket as the largest prediction market and used it to gauge the differences between pre- and post-election polls and voting sentiments.

It is hoped that the enthusiasm for Polymarket can permeate the broader crypto ecosystem and inspire more crypto applications to adopt Polymarket's approach, pursuing 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 continuing to rise, approaching $100,000. Altcoins indirectly related to the elections also saw significant increases, such as altcoins on Solana. Trump's election did not directly enhance Bitcoin's purchasing power, but his public support was sufficient to drive the token's rise.

Expectations

The positive force that the election itself brought to the cryptocurrency industry may not last indefinitely. However, the Republican majority in both the House and Senate could mean a more efficient government that may pass more legislation related to cryptocurrencies.

The number of representatives supporting cryptocurrencies in both parties is significantly higher than those opposing them (266 to 120 in the House, 18 to 12 in the Senate). Pro-crypto Trump may relax regulations on cryptocurrencies or push for supportive regulations. World Liberty Financial is a cryptocurrency project that Trump is promoting and has stated it will operate as an Aave instance (one of the largest DeFi protocols).

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

There is a belief that U.S. regulation has been unclear, and clear regulation could fundamentally change how crypto businesses view operating in the U.S. Most of the largest cryptocurrency venture capital firms are still located in the U.S., so allowing funded crypto companies to operate in the U.S. could strengthen the crypto industry.

Top DeFi protocols like Compound and Uniswap have also shown renewed interest in previously "banned" protocol features (such as staking, fee conversion, etc.). Increasing regulatory transparency around these features could spur a new wave of innovation in the DeFi space.

Overall, I am very optimistic about the direction of the crypto industry following the elections. A unified House and Senate could bring unexpected good news to the rapidly changing crypto industry.