Let's just get it out of the way -- Donald Trump's decisive win over Kamala Harris in the 2024 election is the key reason most cryptocurrencies are heading higher today. As of 3:15 p.m. ET, the entire crypto market has surged 11.2%, which is more than a meaningful move -- it's an incredible daily move that's rarely seen, even in this asset class.
However, as is the case with any marketwide rally, some tokens are performing better than others. Uniswap (UNI 3.00%), Aave (AAVE 8.19%), and Sei (SEI 2.94%) are among today's leading tokens in terms of daily gains, surging 32.3%, 26.9%, and 15.3%, respectively, over that same time frame.
There's a key fundamental reason for this move. Let's dive into what's driving buying activity in these decentralized exchange and trading-related cryptocurrencies today.
Crypto trading activity expected to take off
Uniswap is among the largest decentralized exchanges in the world. Aave is a leading decentralized finance protocol enabling borrowing and lending in the world of digital assets. And Sei is a leading layer-1 crypto project which has been purpose-built to allow decentralized exchanges to operate with greater functionality and improved performance.
Thus, a surge of capital inflows into the world of crypto should disproportionately benefit these three projects. The thesis is really that simple.
As crypto prices trend higher, investors can expect fees tied to transaction activity to surge. That's generally because crypto transaction volumes are highly correlated with price movements -- as prices trend higher, transaction activity tends to pick up as the investing herd looks to capitalize on what appear to be easy-to-capture gains.
So, indications that a pro-crypto Trump presidency could result in less (or more favorable) regulation for this sector and allow for more widespread adoption and trading of various tokens is certainly bullish for projects that earn their bread facilitating transactions, or providing the infrastructure to do so. These three projects clearly have a lot to gain from both sustainably rising prices in the crypto world and the associated increase in transaction activity that can be expected to follow. As their relative moats grow compared to other crypto projects, investors appear to be banking that higher revenues from transaction fees should translate into greater token burn rates and higher valuations as more investors look to take a "picks-and-shovels" approach to this melt-up.
Can the melt-up continue?
Today's incredible performance seen in Uniswap, Aave, and Sei really is an outlier. Among top cryptocurrencies, these three projects tend to be some of the more stable tokens I have on my watch list. That's on a relative basis -- the crypto sector is wildly volatile, as many investors are well aware. But I wouldn't be surprised to see some sort of reversion trade take place in the coming days, where some investors take some cream off the top and begin taking profits. We'll see.
For now, investors looking for ways to play a surge in on-chain trading activity do have three great options to consider in this space. These are three crypto projects I do think are building the foundation for decentralized trading to become more mainstream. If investors do flock toward blockchain-based solutions for trading blockchain projects (a thesis that certainly makes sense), this recent momentum could certainly continue. That said, this move has been notable, so I'll be watching for any sort of selling pressure in the coming weeks to materialize, and my base case is that a "sell the news" trade could form after peak euphoria dies down.
