Social Interest Indicator Signal Update
The cryptocurrency market has experienced a bullish rally, fueled by investor optimism surrounding the expected upcoming crypto-friendly U.S. administration. Since election day on 5th November, the price of Bitcoin (BTC) has risen by 30%, surpassed its previous all-time high, and started price exploration. This upward momentum is mainly attributed to the election outcome, where the victory of a pro-crypto candidate catalyzed both bullish sentiment and social interest in bitcoin.
The foundation for this optimism was laid during the election campaigns with opposing stances on the cryptocurrency policies of the two political parties. While Donald Trump is a controversial and polarizing personality (Note: This article is an objective description of his crypto promises, and does not advertise for any political party), his pro-crypto attitude and his announcement to turn the United States into the „Crypto Capital of the World“ could turn out to be beneficial for the entire crypto industry. Trump’s verbal commitment to supporting the cryptocurrency industry could have lasting positive implications, depending on how his policies are implemented.
As presidential candidate, Trump outlined his crypto vision at the Bitcoin Conference in July 2024 in Nashville. (1) In his keynote, he promised to establish pro crypto regulations, which are intended to end and investigate the Operation Chokepoint 2.0, a covert and informal pressure campaign by federal banking regulators on banks aimed at to restricting financial services to crypto-related business. (2) Additionally, Trump proposed to convert all future and currently 210 000 seized BTC by the U.S. government into a strategic Bitcoin reserve, representing about 1% of the total Bitcoin supply. (3) In addition, he pointed out his plans to lower electricity cost, which create favorable conditions for technologies such as AI and crypto mining. With regards to regulation and policies, he mentioned to appoint a bitcoin and crypto advisory council, to keep the right of self-custody, to provide regulatory clarity to create a framework for enabling the safe responsible expansion of stablecoins. In addition, he positioned himself against the creation of a central bank digital currency (CBDC) during his presidency, which was perceived positively from the crypto community valuing decentralization.
The spreading hope about the pro-crypto political future and the all time highs reported in the news, sparked the public interest into the topic. The developed social interest indicator reached highest values (> 80) in 2024 and printed a signal on the chart for the last two consecutive weeks on 10th and 17th November. For investors following a long-term strategy based on social interest indicators, sell orders are recommended. A strategy focusing on taking profits at high social interest indicator values, would have executed two 20% profit-taking sell orders on the total holdings, capitalizing on the market’s upward movement. The current market action appears to be driven by the idea of „buying the rumor“, with investors pricing in the expectation of crypto-friendly executive orders and regulatory shifts in line with Trump’s campaign promises. However, the prevailing bullish sentiment is still based on promises rather than actions. While market enthusiasm is high, investors should be reminded that their optimism may be premature. If the administration fails to deliver on its pro-crypto promises, a correction in the market could follow.