The price of Ethereum’s native asset Ether (ETH) is rallying following Trump’s victory in the United States 2024 US Presidential election.

It appears that the Republican candidate’s win has revitalized the alt-coin market and ETH could be spearheading that recovery as it is posting 6.3% gains in the past 24 hours according to data from CoinMarketCap.

The market’s optimism about Trump’s pro-crypto stance and his promises to bring regulatory and legislative clarity to the sector could be the leading cause of this rally.

He claimed throughout his campaign that he would make America the “crypto capital of the planet” in what was considered a remarkable change from his previous views about the sector.

“ETH could EASILY double in a week or two, especially given the fact that Trump has some decent history with Ethereum and is currently building a DeFi project on it,” noted independent market analyst EthereanVibin.

Just weeks before the election, members of the Trump family, including the elected President, heavily promoted a new decentralized finance (DeFi) project known as World Liberty Financial.

Trump’s ambitions in this nascent sector are considered an indication that he will support policies that foster the adoption of blockchain technology across the government and legislation that helps the sector spread its wings in the United States.

“Imagine the next 4 years being the complete opposite of the last few years when it comes to what DeFi projects are ‘allowed’ to do,” said Ethereum educator @sassal0x. “Fee switches, fee switches everywhere!”

Ethereum Daily Spot ETF Inflows Surge to Six-Week High

Another indicator that crypto investors welcomed Trump’s victory was a surge in the capital inflows that went to the recently approved Ethereum-linked spot exchange-traded funds (ETFs) in the US.

Data from Coinglass pointed out that net aggregate inflows going to these vehicles ended at $52.3 million – the highest single-day positive number in the past six weeks.

Although the figure pales in comparison to the nearly $622 million that BTC spot ETFs received on that same day, it still represents a remarkable surge for ETH-linked products considering that the demand for the latter has been quite weak throughout the year.

BlackRock’s iShares Ethereum Trust surprisingly reported net zero inflows on this day while the majority of the positive flows went to the Fidelity Ethereum Fund and the Grayscale Ethereum Mini Trust.

“Institutional investments tend to encourage market stability and long-term growth prospects for the underlying asset,” reporters from Cointelegraph noted, suggesting that the increased inflows could have a positive influence on Ethereum’s future performance.

ETH Closes Performance Gap with BTC in the Past 30 Days

Ethereum has seen its performance improve significantly in the past month, possibly as a result of Trump’s odds of winning progressively improving. Data from CoinMarketCap shows that ETH has produced gains of 15.4% in the past 30 days.

ethereum price has rallied in the past 30 days
ETH 30-day Chart – Source: CoinMarketCap

This percentage still lags the 20% jump that BTC experienced during this period but it is much better than the wide gap that the two digital assets show in terms of yearly performance.

As of today, the price stands at nearly $2,810 per coin with annual gains sitting at 23.2% compared to 77.3% posted by BTC on a year-to-date basis.

An important metric known as the ETH/BTC ratio, which tracks the difference between the relative performance of the two assets, has started to shrink since November 5th. This suggests that investors could be once again pouring money into the native asset of the largest smart contracts network in the space.

“Ethereum’s value against Bitcoin may have already reached its lowest point,” said crypto analyst Benjamin Cowen. “If the ETH/BTC ratio can ‘get above’ the Simple Moving Average (SMA), there is a ‘good chance’ the ratio ‘has bottomed.'”

Pectra Upgrade Could Bring Significant Improvements to the Network

Despite the relatively disappointing performance that ETH has exhibited since the year started, independent analysts and crypto enthusiasts believe that the asset is undervalued at the moment and could experience a significant rally in the short term.

Pseudonymous crypto trader Byzantine General said in a recent post that he believes Ether “has a very real chance of going on a monster rally now.”

“Fathom the unfathomable,” crypto analyst Miles Deutscher wrote, noting that ETH is “outperforming BTC and SOL” across the same 24-hour period.

Meanwhile, Dan Tapiero, the founder of 10T Holdings, is even more bullish on Ethereum’s prospects, stating that the asset is “too cheap” and that it is “going over” $8,000 in the next year.

This optimism is not solely based on Trump’s victory. The network has reportedly made significant progress on various fronts. This includes the upcoming Pectra upgrade, which is expected to improve user experience and staking procedures.

The Ethereum Foundation recently launched a short-lived testnet called Mekong, which allows developers to experiment with the upcoming changes before they are implemented on the Ethereum mainnet.

Coupled with a positive outlook on the regulatory front, investors appear to have a few reasons to be confident about Ethereum’s long-term prospects.

Trump’s DeFi Ambitions Are Seen as Positive Indication of His Support to the Sector

Trump’s ties with the DeFi sector are perhaps the most important catalyst that investors may be considering at the moment as applications in this nascent segment of the crypto industry are mostly built on top of the Ethereum network and its corresponding layer-2 protocols.

“DeFi Renaissance thesis is progressing as expected with Trump deregulation and crypto-friendly policy and rule-making from Republican admin and Senate,” wrote Arthur Cheong, co-founder at DeFiance Capital.

Trump promised to reduce the regulatory burdens that make it difficult for firms in this space to enter the US market and operate legally. This would involve providing clearer guidelines for initial coin offerings (ICOs) and changing how different services are treated under existing securities laws.

The US Securities and Exchange Commission (SEC) has opened legal proceedings against crypto companies that offer savings accounts, peer-to-peer (P2P) lending, yield-farming, and other similar products.

These firms argue that these offerings should not be treated equally as regular securities amid the unique nature and design of digital assets.

Trump may understand the needs and wants of the DeFi sector much better than his predecessor’s administration. He will almost certainly make major changes in the SEC’s leadership, which is likely to loosen DeFi and crypto regulations in general.

BTC and Crypto Stocks Experience Post-Election Surge

Ether is not the only crypto asset that has been benefitted by Trump’s win. Bitcoin reached a new all-time high above $76,000 this week and other cryptocurrencies such as Dogecoin have also seen significant gains in the past 7 days.

Coinbase (COIN), one of the largest cryptocurrency exchanges, saw its share price leap by 17% shortly after Trump was declared the winner while shares of the online brokerage firm Robinhood Markets, which also offers crypto trading services, soared by 12%.

MicroStrategy, one of the largest corporate holders of Bitcoin, saw its stock price increase by 10% as Bitcoin skyrocketed.

Despite the rally, a handful of experts have cautioned investors about the risks associated with the current crypto market euphoria.

“Investors should only dabble in crypto with money that they can be prepared to lose,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown. “Because we’ve seen these wild swings in the past.”

Streeter also noted that while the Trump administration may pursue a “light touch regulation” approach for the crypto industry, it could also lead to increased volatility and potential risks for investors.

“Certainly that’s what crypto fans would want,” she said. “They want the sheen of legitimacy to be brought to crypto, but they don’t want regulations to be too onerous to stop opportunities and innovation.”

Trump’s other claimed policies, like mass deportations and large tariffs on all foreign goods, would be devastating for the US economy and the ripple effects would no doubt hurt crypto as well.

As the crypto market continues to react to this tectonic shift in the political landscape, the first few months of the Donald Trump administration will be critical to the sector as everyone will be leaning toward the edge of their seat to see what he will do for an industry that has poured millions to make sure that he and his folks in the House and the Senate endorse and promote pro-crypto legislation.