Crypto adoption is accelerating under the Trump administration. The United States has emerged as a central force in shaping the crypto market, both from the standpoint of regulation and macroeconomics. The crypto market has begun moving along with US stock markets, reflecting growing institutional participation and sensitivity to macroeconomic conditions. In its latest report, HTX Ventures reviews the implementation of President Donald Trump’s crypto policies, current US dollar liquidity and its effect on the crypto markets.
How regulation is reshaping crypto market cycles
Legalization and dollarization are the defining core tailwinds of this cycle. Bitcoin stands as the primary beneficiary, acting as a gateway for US institutional capital through ETFs, which solidifies the long-term legitimacy of the US crypto industry. The crypto adoption process in the US is expected to generate a continuous stream of positive news and regulatory developments.
The evolution of US crypto policy will likely span the entirety of the second Trump term. Proposals to finance large-scale Bitcoin purchases, similar to the accumulation of gold during the Great Depression, will require fiscal maneuvering. These measures may even include engineering negative GDP prints to justify monetary stimulus, as has occurred in past cycles, including 2008, 2020, and other periods of economic stress. The US has not yet allocated an official budget for sovereign Bitcoin purchases.
How the Strategic Bitcoin Reserve could change everything
Unlike past cycles propelled by catalysts such as the ICO boom in 2017 or the DeFi Summer of 2020, the current cycle is driven by a regulatory shift, including the SEC’s supportive stance on crypto and the proposed Strategic Bitcoin Reserve.
The crypto market is increasingly aligned with global macro trends, mirroring tech equities in their longer, more stable cycles. In the current cycle, Bitcoin exhibits a stronger correlation with traditional financial markets, alongside abnormally low volatility.
Institutional investors have now become the primary drivers of Bitcoin’s price movements. This can be demonstrated by open interest in CME Bitcoin futures, which rose from under $4 billion before the approval of ETFs to a consistent level above $10 billion, with peaks above $20 billion.
However, CME’s open interest may be inflated by institutional investors, who use leverage to profit from the spread between spot ETFs and futures when the basis exceeds the US Treasury yield. If these basis arbitrage positions are unwound at scale, they could trigger sharp price declines through spot ETF outflows.
Trump’s crypto policy execution
Recent policies implemented under the Trump administration have accelerated the institutionalization of cryptocurrencies. The repeal of SAB 121 enabled traditional financial institutions to offer custodial services for crypto assets. As such, Citibank actively explores the opportunity of adding crypto custody, while JPMorgan Chase plans to offer crypto investments to its clients through a third-party custodian.
The FIT21 bill and executive actions around stablecoins have also laid the groundwork for long-term regulatory clarity. FIT21, though not yet enacted, sets the direction for digital asset classification. It splits them between the SEC and the CFTC, depending on the level of decentralization: Highly decentralized tokens fall under the CFTC, while more centralized assets remain under the SEC’s oversight.
The future outlook points to even more favorable regulatory developments for the crypto industry. While the US Strategic Bitcoin Reserve has been recently established, active purchases of Bitcoin have not yet begun, which suggests that a key growth catalyst may still be ahead.
In parallel, stablecoin legislation is expected to advance rapidly. The proposed GENIUS Act aims to create a comprehensive regulatory framework for dollar-backed stablecoins, providing a legitimate entry point for banks, payment processors and corporations. The Trump administration has already supported the initiative to enable commercial banks to custody or issue stablecoins during its first term.
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