US Regains Crypto Market Dominance as Trump’s Reelection Fuels Trading Frenzy
The United States has reclaimed its position as the central hub of the cryptocurrency market, driven by Donald Trump’s reelection to the presidency and a surge in demand for US-based digital asset funds and derivatives contracts, Bloomberg reports.
This shift marks a significant turnaround after a period when Asia appeared to be the dominant force in the crypto sector.
Trump’s pledge to position the US as the cornerstone of the crypto industry has sparked a wave of trading activity. This, coupled with the unexpectedly successful launch of US Bitcoin exchange-traded funds (ETFs) at the beginning of 2024, has created a powerful catalyst for market growth.
As a result, the US is increasingly becoming the key driver for digital-asset liquidity and benchmark pricing. This is a stark contrast to the previous year when the Biden administration’s regulatory crackdown seemed to favor Asia. However, Trump’s policies are reversing that trend.
Data from Kaiko reveals that the share of daily Bitcoin trading against the dollar occurring during U.S. trading hours has risen to roughly 53%, up from 40% in 2021. According to CF Benchmarks Head of Product Thomas Erdösi, growing institutional participation has shifted “liquidity dominance” towards the US.
US Bitcoin ETFs have collectively generated more than $500 billion in cumulative daily trading volume and around $36 billion in net inflows since their January launch. BlackRock Inc.’s iShares Bitcoin Trust has been particularly successful, establishing itself as one of the most successful fund launches ever. It’s anticipated that under Trump, the spectrum of US crypto ETFs will broaden beyond the existing Bitcoin and Ether offerings.
Open interest – the total number of outstanding contracts – for Bitcoin and Ether futures hosted by Chicago-based CME Group Inc. have also reached record highs this year. CME is now the leading platform for Bitcoin futures open interest, overtaking offshore platform Binance Holdings Ltd., which previously held that position.
The collapse of the FTX exchange and sister hedge fund Alameda Research in 2022 severely impacted market liquidity. However, the introduction of US ETFs and Trump’s positive rhetoric towards cryptocurrency have helped to revitalize the market. Market depth, which measures the ability to handle large orders without significant price fluctuations, is now back to levels seen before the FTX crisis, effectively closing much of the “Alameda gap,” according to Kaiko data.
