How Donald Trump Can Make Ethereum Great Again in 2025

Ethereum Ether (ETH) has suffered underperformance over the past 18 months, while Bitcoin (BTC) and other alternative layer-1 coins, including the likes of Solana (SOL) and Sui (SUI), have dramatically outperformed. is it.

ETH has gained 88% over the past 18 months, SOL has posted a 1,040% gain, and SUI has rallied 448% over the same time frame.

“ETH finds itself sandwiched between two shiny things in 2024: Bitcoin, which has attracted a significant amount of institutional interest, and Solana, which has gained traction with retail investors. ETH was a very unusual person,” Bitwise Chief Investment Officer Matt Hougan told Cointelegraph.

However, many crypto analysts believe that the election of Donald Trump in the United States and the expected crypto-friendly stance of key agencies under the new administration could change the performance of Ether in the crypto market. After all, the incoming presidential family has launched its own decentralized finance (DeFi) project, World Freedom Finance, on its chain.

Experts are looking at new developments for the mass position on ETH going to 2025, from the disappearance of “financial nihilism” to the full reform of the US Securities and Exchange Commission, positive regulatory developments, Ether exchange-traded funds (ETF) and the crypto Commodity Futures Trading Commission (CFTC). ) added control.

“Ethereum is ready for more leverage. [from a Trump win] Unlike other protocols, especially since it is much larger and more mature than other ecosystems except Bitcoin, maturity is narrow in scope,” Consensus CEO Joe Lubin told Cointelegraph at DevCon 2024.

At the same time, the shine is starting to come off Solana, the SOL token reached a high of $264 a month ago, but has since retreated to $192 due to concerns about token openings.

The end of crypto currency nihilism

One of the biggest factors weighing heavily on Ethereum's price is regulators' crackdown on securities violations by ecosystem projects including Uniswap, Consensus, Lido, and Rocket Pool. Memecoin projects, meanwhile, have been largely ignored by the SEC.

A related issue is the desperation of crypto natives who were abandoned by venture capitalists during the brutal bear market. Many have turned to fair-launch memecoins and many other speculative assets. Travis Kling, founder and chief investment officer of Ekigai Asset Management, calls this phenomenon “financial nihilism.”

In the year In a March 12 article, Keeling says that financial nihilism places no importance on “fundamentals” or any fundamental “idea of ​​value.”

“Financial nihilism goes hand in hand with populism – a political approach that seeks to appeal to ordinary people whose concerns are being ignored by established elites.”

“The main drivers of financial nihilism and populism are the same – this system is not working for me, so I want to try something very different (for example, buy SHIB or vote for Trump),” Kling wrote.

However, Ethereum trades almost entirely on fundamentals and leverage. Advocates repeatedly claim that the blockchain network and its Layer 2 ecosystem are the future of legal, programmable digital money, smart contracts and decentralized financial transactions.

Trump's SEC reforms bode well for DeFi.

According to Saul Rejwan, managing partner of crypto venture capital firm Masterkey, Trump's pro-crypto stance may be counterproductive to financial nihilism, as legitimate projects are encouraged by regulators instead of being stymied by the SEC's endless wave of notices.

On December 4, Trump tapped pro-crypto trader and former SEC Commissioner Paul Atkins as a candidate for the next SEC chairman, with current chairman Gary Gensler set to leave the agency on January 20.

The SEC will lose three Democratic commissioners under Trump, Jamie Lizaraga is set to leave the agency on January 17th, and most recently, the Senate Banking Committee will cancel a December 17th vote to re-appoint crypto-skeptic Commissioner Caroline Crenshaw.

According to the governing party, Republicans appoint most of the three commissioners, but the rapid-fire resignations and cancellations would open up the SEC to four Republican-appointed, crypto-friendly commissioners if Trump violates protocol.

Rejwan told Cointelegraph that the legal sectors of the crypto industry, especially DeFi and Decentralized Physical Infrastructure (DePIN), will benefit the most from the new administration and a more crypto-friendly SEC.

“DeFi projects will flourish under a more favorable regulatory environment. Sectors like refinancing need less regulatory pressure to attract institutional investors,” he said.

“We expect this new leadership to lower barriers to entry and make it easier for early-stage crypto entrepreneurs and strong companies to innovate and grow.”

The Gensler-led SEC under the Biden administration has been hostile to the popularity of DeFi, with the regulator bringing Uniswap, the largest decentralized exchange on Ethereum, into its sights earlier this year.

The SEC has proposed expanding the definition of what qualifies as a currency in the Exchange Act of 1934, clearly arguing that it should include crypto market participants in DeFi.

Anoop Nanra, CEO of TruGuard Labs, said he expects the SEC to completely overhaul its enforcement practices and policy directions, adding that crypto assets will be classified as “assets” under the new administration.

“I've heard from several people in Trump's orbit that ownership is a critical issue for this administration and that this will be a calling card for the Republican Party's stance on crypto,” he said.

“Accordingly, I expect to see a complete overhaul of the SEC's position.”

On December 19, the Token Alliance — co-chaired by incoming SEC Chairman Paul Atkins — met with the staff of SEC Commissioners Hester Pierce and Mark Uyeda and released a list of priorities. The agency has called for the controversial 2018 “Hinman speech” to be formally removed from a series of rules that would have defined Defi players as “exchanges” under the law.

Nanara also said that he expects the CFTC to be soft on digital assets and that the SEC will have more discussions with the CFTC moving forward.

“I expect the CFTC to take a more progressive position on crypto as well, realigning the oversight powers between the SEC and the CFTC,” Nanara said.

SEC vs. CFTC: Does FIT21 Matter?

Many analysts believe that the Financial Innovation and Technology for the 21st Century Act (FIT21) — a bill passed by the House in May — will be central to the CFTC and SEC's crackdown on crypto.

In short, the bill sought to introduce a federal framework for crypto regulation, pull back some of the SEC's authority over digital assets, and hand over regulation of spot crypto markets to the CFTC instead.

Since Ether is treated as a commodity by CFCC, several researchers have already confirmed that FIT21 could have significant benefits for Ethereum from a policy perspective.

But now, with the regulatory landscape changing, it begs the question whether the FIT21 Bill is necessary or even desirable anymore. The bill may just be an unnecessary policy negotiation made at a time of hostility to crypto assets.

In the year In a Nov. 15 client alert, lawyers at the law firm Brownstein said the bill has stalled but could “serve as a springboard for legislative efforts in the new Congress.”

Regardless of whether FIT21 passes, Trump is reportedly considering giving the CFTC oversight of crypto during his upcoming term, which would classify most crypto projects as commodities if they meet certain criteria.

If the CFTC's regulatory oversight of crypto is granted, it could come as a win for the industry, which has long believed the agency would be the preferred regulator — the CFTC is widely seen as having a “light touch” on regulation.

What legal changes can we expect under Trump?

Robert Knup, a crypto advocate, told Cointelegraph that the Trump administration's launch of Global Freedom Finance is the biggest “soft” endorsement of Ethereum, DeFi and real-world crypto projects. It has already bought millions of dollars worth of ETH, Chainlink (LINK) and Aave (AAVE).

Knup believes many in crypto underestimate Trump's positive impact on the industry.

“They're going to be very helpful for crypto right out of the gate.”

According to Knup, Trump is using Global Freedom Finance as a beacon to show the world how to really work with crypto when he becomes president.

“He's basically telling the world that it's okay to do this going forward in his administration,” he said.

Knup also pointed to the Trump administration moving extremely quickly on crypto, citing Trump's close relationship with Elon Musk and his appointment of David Sachs as crypto and AI czar.

“It's going to be Blitzkrieg.”

ETH stock products can be converted into ETFs.

SEC Commissioner Pearce has hinted at the potential to review decisions to ban redemptions in kind for crypto ETFs and increase stakes for ether ETFs.

“If it goes from a majority of commissioners who don't want things to go to a majority of commissioners who want things to go, yes, it's easier,” she said.

ETF issuers — including Fidelity, 21Shares and Franklin Templeton — have all bid to increase the stock, which currently yields about 3.1% annually, according to Stacking Awards.

“Under the new Trump 2.0 crypto-friendly SEC, we believe that ETH stock production will be approved,” Bernstein said, predicting that growing network activity on Ethereum would see rewards “juiced” by 4%-5%.

It doesn't take much to connect the dots as to why the ETF offers domestic production for the asset, especially in an economic landscape where the US Federal Reserve is looking to cut interest rates further in 2025.

“In a shrinking environment, ETH yield can be very attractive. The yield feature in ETFs also leaves asset managers with some spread,” Bernstein said, adding that this would improve ETH economics and introduce more incentives to push ETH ETFs to institutional investors.

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