Since the victory of United States President-elect Donald Trump, interest in cryptocurrency has spiked, with Bitcoin surging to all-time highs as his campaign promised to support the crypto industry.

Market observers say the spike in search interest and inflows suggest renewed interest among retail investors and a potential wave of new buyers ready to enter the crypto market.

Ryan Chow, co-founder and CEO of Bitcoin (BTC) staking platform Solv Protocol, told Cointelegraph that Trump’s victory is a “major catalyst for launching the next bull market.” 

He expressed optimism about the surge in retail investors, saying:

“Bitcoin reaching an all-time high is one of the best advertisements for crypto there is.”

In previous Bitcoin bull runs, retail investors have played an important role, though they have seemed to be dormant during this cycle. Institutional investors have taken the lead, especially since the Securities and Exchange Commission (SEC) approved spot Bitcoin exchange-traded funds in January.

Coinbase, a favored crypto exchange among retail traders, saw its stock value drop after its Q3 shareholder letter on Oct. 30 revealed lower-than-expected revenue in trading fees. The revenue hit $1.13 billion, up over 81% from the same quarter a year earlier but falling short of Wall Street analysts forecasts of $1.26 billion.

The exchange blamed it on “softer market conditions,” as a slump in retail trading was central to the poor results. During October, Bitcoin search volume on Google hit a yearly low, indicating that retail traders still hadn’t hopped onto the train of the crypto bull market.

Online payments giant PayPal reported in a SEC filing on Nov. 5 a decline in crypto held on behalf of its customers by almost 11% from the second to third quarter to about $2.17 billion in another sign of less retail crypto activity.

Crypto-macro analyst Noelle Acheson said in her Crypto is Macro Now newsletter that “retail investors, on the whole, tend to be ‘late adopters’” as they are motivated by price-related headlines and widespread social interest. Acheson said that given their absence, market observers can deduce that the crypto cycle is in its early days, adding: “We’ll know we’re nearing peak hype when retail is ‘piling in.’”

Crypto investor and Bitcoin educator Chris Dunn told Cointelegraph, “Trump’s victory is a narrative that’s driving price action to test all-time highs” and a “breakout above $75,000 that will bring retail back.” 

Trump’s election win and the new Bitcoin ATHs have boosted Bitcoin Google searches. Twenty-four hours after Trump’s election win, the term “Bitcoin” spiked rapidly, showing a possible shift in the mindset of retail traders.

Dunn said Trump’s victory was precisely what people needed to become optimistic about the future of crypto in the US, adding:

“People love a good ‘reason’ to hop on the bandwagon, and this is a compelling one.”

Dunn said retail investors will first turn to Bitcoin, adding: “Now that it looks like the anti-crypto army has been crushed, I expect smaller cap altcoins to get some momentum, too.”

Bitcoin’s upward trend since November 2022, when it bottomed at almost $15,000, carried strong momentum into 2024. Despite favorable conditions, it may seem puzzling why retail investors have yet to enter the crypto market en masse.

Retail investors scarry scars from previous market collapses

Retail investors tend to arrive late to the party and end up as liquidity exits for whales and smart-money investors who bought in early.

Dunn said retail investors are still suffering a hangover “from the FTX implosion.” He added that retail investors thought “crypto was dead in the US thanks to Elizabeth Warren and Gary Gensler’s anti-innovation rhetoric.”

The collapse of FTX exposed widespread negligence and unethical practices in the crypto industry, highlighting serious flaws in corporate governance, risk management and regulatory oversight.

Thousands of customers lost their investments, and billions of dollars remain unaccounted for, shaking public confidence in the broader crypto sector. 

The founder of FTX, Sam “SBF” Bankman-Fried, once hailed as the “white knight” of crypto, became its greatest villain. His fall from grace not only exposed deep flaws in the industry but also eroded the trust that had been built over the years.

The SBF’s imprisonment and the downfall of other rotten apples within the crypto industry have helped to somewhat cleanse the sector’s image.

Trump’s victory may also alleviate the regulatory concerns of US retail investors, particularly regarding the prosecution of the US crypto industry through so-called “regulation by enforcement,” a strategy pursued by the SEC under Gensler.

Trump has promised to fire Gensler “on day one” and replace him with a more crypto-friendly figure, signaling a potential shift in the regulatory approach to digital assets. Additionally, Trump vowed to remove Democratic Senator Elizabeth Warren from any influence over Bitcoin holders, though this promise is not within the direct power of a US president to enforce.

Gensler’s tenure as SEC Chair is nearing its end, but Warren remains a prominent figure, having secured victory in the Massachusetts Senate race against crypto advocate John Deaton. 

Despite her win, Warren’s influence in the Senate may diminish, as Republicans have gained control of this crucial political body, potentially limiting her ability to push forward anti-crypto legislation.

Market memory often fades when new opportunities emerge, but as with any crisis, time is required for healing. Trump’s election victory and Bitcoin’s new ATHs may provide the catalyst retail investors need to put past setbacks behind them and re-enter the crypto market with renewed optimism.