How is the “Trump Trade” Impacting Cryptocurrency Markets?

Cryptocurrency has always been a wild ride, but when politics gets involved, things get even more interesting and unpredictable. As the 2024 US presidential election approaches, the role of politics in shaping crypto markets and trading behaviors has become a hot topic, and the influence of political figures and events in this regard is equally undeniable.

As one reputable crypto media platform suggested, political leaders who support crypto innovation may attract younger, tech-savvy voters. Conversely, those who advocate strict regulations may attract voters concerned about security and fraud. How these candidates approach crypto could influence voters’ opinions and, consequently, impact the market.

What do the numbers say?

The growing importance of cryptocurrency in US politics is evident as presidential candidates are now accepting donations in cryptocurrency. Harris Poll November 2023 poll showed that 47% of American voters think cryptocurrency will be part of their investment portfolio in some form. This, coupled with the approval of Bitcoin and Ether exchange-traded funds (ETFs) show that the cryptocurrency’s future looks bright.

Source: Cointelegraph

Interestingly, another Grayscale sponsored Insights from the Harris Poll in April found that “nearly half” of voters “don’t trust political candidates who would interfere with cryptocurrencies.” The report further indicated that 3 in 10 people are more likely to support a pro-crypto politician.

Source: Harris Poll Insights 2024

Historical context

Looking back to 2017, President Trump’s signing of the Tax Cuts and Jobs Act had a significant impact curling effects on the stock market and the cryptocurrency market. The act increased substantially Bitcoinvalue, with the cryptocurrency reaching nearly $20,000 in December 2017.

However, in 2018, the Trump administration’s crackdown on cryptocurrency scams and fraudulent ICOs caused Bitcoin‘s price falls. This demonstrates how political events and statements can influence the market positively or negatively.

The impact of politics on cryptocurrencies is not limited to the U.S. Global political events and figures also impact the market. For example, regulatory decisions in China have historically caused significant market movements. In 2021, China’s crackdown Bitcoin mining has led to a massive drop in Bitcoinprice of ‘.

On the other hand, El Salvador’s announcement of Bitcoin as legal tender had a positive impact on the market. According to the data, the closing price of Bitcoin in June of that year it was around US$35,127.08 and in September the price of BTC closed at US$43,858.37, again reflecting the market’s sensitivity to political decisions.

The ‘Trump Trade’ and Cryptocurrency

Former President Donald Trump, who once called Bitcoin a “fraud” and insisted that it “competes with the dollar,” which he wanted to remain “the world’s currency,” he recently expressed strong support for the industry.

His promises to support the US cryptocurrency miners It is reduce regulations have garnered industry support and funding—like the million dollars in Ethereum (ETH) from former Kraken CEO Jesse Powellanother 2 million dollars in Bitcoin (BTC) of Winklevoss Twinsand telling.

This shift in position, often referred to as the “Trump Trade”, has caused Bitcoin a fundamental issue in the 2024 elections.

The Trump Trade refers to the simultaneous rise in U.S. stocks, Treasury yields and the dollar that followed Donald Trump’s victory in the 2016 presidential election. Analysts at Bernstein suggest that cryptocurrency could emerge as the main Trump Trade during the current election cycle, as Republican prospects improve and the party’s standard-bearer increasingly adopts a pro-crypto viewpoint.

This shift in political stance towards cryptocurrencies is not just a campaign financing strategy, but also a reflection of the growing importance and acceptance of digital assets in the political arena.

The Demographics of the Crypto Voter

Furthermore, the demographic of crypto voters is diverse, not only in terms of political allegiances but also in terms of their social and psychological characteristics. Experts are divided on how the 2024 election will impact the crypto market. Some believe the market could surge if a pro-crypto candidate wins the election. Others worry that too much freedom could lead to scams and instability.

A to study A 2022 study published in the journal PLOS ONE found that 30% of American adults owned some form of cryptocurrency. These individuals have a variety of beliefs and political identities. The study also found that the cryptocurrency market can change significantly around election times.

Source: PLOS ONE Report

How Cryptocurrency Policies Could Affect the Election

Cryptocurrency policies are playing a bigger role than ever in the 2024 presidential election. This is the first election where major candidates are discussing crypto prominently. For example, as previously noted, Trump is now accepting crypto donations for his campaign and has given to crypto industry advocates such as Messari CEO Ryan Selkis a platform to speak out about their beliefs. This is the beginning of their effort to attract the anti-central bank digital currency (CBDC) and pro-crypto vote.

On the other hand, the Biden campaign claims to be talking to crypto companies to seek guidance on a good “crypto community and crypto policy for the future” after Biden in May vetoed the SEC’s Staff Accounting Bulletin 121 (SAB 121) — which would have allowed financial institutions to host cryptocurrencies — claiming the act would “put the welfare of consumers and investors at risk.”

Clearly, Trump’s pro-crypto stance has put pressure on the president Joe Biden to soften his previous aggressive stance. However, many believe that Biden is taking a firm stance against the cryptocurrency industry.

If Trump wins the election, we could see a surge in crypto investments. If the election swings more towards the Republican side, crypto could become a major Trump trade and hopes for a better regulatory environment could change the narrative around blockchains.

Perhaps in a continued effort by the Trump camp to secure the crypto vote, Decrypt Media recently reported that Trump will still speak at the historic Bitcoin Conference in Nashville in less than two weeks, despite escaping an assassination attempt over the weekend.

The marriage of politics and cryptocurrency is a fascinating and complex subject. The influence of political figures and events on cryptocurrency markets and trading behaviors is undeniable. And as Coinbase CEO Brian Armstrong said last year: “Being anti-crypto is a very bad political strategy for 2024.” And here we are.

Author: Ayanfe Fakunle

The #DisruptionBanking editorial team has taken every precaution to ensure that no person or organization has been negatively impacted or received any type of financial advice from this article. This article is definitely not financial advice.

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