Trump’s election and surging Solana memecoin activity set positive tone for crypto markets, say Coinbase analysts

Coinbase analysts maintain a positive outlook for the cryptocurrency market as the end of 2024 nears, citing favorable macroeconomic conditions.

"Overall, we would still expect a supportive macro environment for crypto performance over the next 1-2 quarters, driven by stimulative U.S. monetary policy and stronger U.S. economic conditions," Coinbase Head of Institutional Research David Duong and Coinbase Institutional Research Analyst David Han said.

In addition to these economic factors, the analysts noted that the election of Donald Trump as the 47th president of the United States — who is set to be inaugurated on Jan. 20, 2025 — could have a further positive impact on the crypto market. Meanwhile, the Coinbase analysts noted the incoming Trump administration’s projected deficit spending, if it materializes, should translate into greater risk-taking as more dollars circulate in the economy.

Crypto-supportive candidates were also elected from both sides of the political divide after the U.S. election results were tallied.

"This has set up strong expectations about a friendlier regulatory environment in the U.S. next year," they added. The analysts noted the U.S. House of Representatives gained 263 pro-crypto candidates versus 118 anti-crypto candidates and the Senate gained 18 pro-crypto candidates versus 12 anti-crypto candidates.

Solana's memecoin activity is a major contributor to network fees

The Coinbase analysts cited the increase in Solana network activity over the past year, drawing attention to the growth in memecoin trading on the blockchain.

"Solana's status as a memecoin hub means its onchain trading protocols are the third most profitable crypto sector after stablecoins and layer-1 network fees," they said.

Coinbase analysts said that memecoins have been the best-performing crypto sector by a wide margin this year, as measured by total market cap growth. "Much of this activity has been on Solana, centered around the rising adoption of pump.fun as the dominant memecoin launcher," they said.

They added that more than three million memecoins have been launched on pump.fun to date, making it a major contributor to Solana’s network fees.

"The dominance of trading-linked activity on Solana is visible in its contributions to the network’s transaction fees, they account for more than 82% of all non-vote fees paid on the network," the Coinbase analysts said.

Solana gained 7% over the past 24 hours to change hands at $201 at the time of writing, according to The Block’s price page. Bitcoin is up around 1% to trade at $75,800 after it reached a new all-time high of over $76,600 on Thursday.