Markets
What does the 2024 US presidential election mean for cryptocurrency markets?
With the resurgence of cryptocurrency markets this year, cryptocurrency is poised to become a bigger election topic than ever before. Some studies It is estimated that 15.6% of Americans own some cryptocurrency.
That’s over 50 million potential voters. Some analysts even believe that voters who own cryptocurrencies could influence the election.
What does this mean for cryptocurrency prices? And how can we profit?
Context: The “War on Cryptocurrency”
Since the early days of Bitcoin, the cryptocurrency has had many enemies. Many of the most outspoken critics of Bitcoin and other cryptocurrencies are members of the US Democratic Party.
Most prominent among them is Elizabeth Warren, who cited concerns about Iran and North Korea using cryptocurrency and called for stronger regulation. Biden has vetoed legislation that would allow banks and other financial sector companies to hold Bitcoin and other cryptocurrencies.
The Biden administration has gone so far as to publish a report attacking Bitcoin’s Proof-of-Work consensus algorithm and arguing for a central bank digital currency (CBDC). The Justice Department, under Biden, also stuck the founders of Samourai Wallet, a popular Bitcoin mixing service.
All of this has led to a situation where Biden, and the Democratic party in general, is seen as anti-crypto. As a result, when Biden performed poorly in his first debate with Trump, the price of Bitcoin jumped more than 1% during the course of the 90-minute debate.
Trump Goes After “Crypto-Vote”
Trump saw a huge opportunity in the Democrats’ aversion to crypto. While he had previously called cryptocurrencies a scam, he has now made a major reversal.
The Republican Real Estate Tycoon has became the first presidential candidate to accept campaign donations in Bitcoin, along with Ethereum, Solana, Dogecoin and… Shiba Inu. Yes, Shiba Inu currency.
Trump has made a series of bold claims, including that he will “end Biden’s war on crypto” and ensure that all remaining Bitcoin is mined in America. This sentiment echoes many industry leaders, who argue that excessive regulation will only push innovation overseas and ultimately hurt America.
Trump has promised to build a “crypto army” to lead their campaign to victory.
Will Democrats Fight Back?
Trump’s move has some Democrats nervous. A growing movement within the Democratic party is calling for cryptocurrency adoption as well. Chuck Schumer and 10 other Democratic senators have approved a bill rolling backwards some onerous crypto regulations. Biden vetoed the bill.
However, the cryptocurrency lobby is also growing stronger and exerting influence over Democrats. Some reports say that cryptocurrency companies have joined forces 160 million dollars for campaign contributions.
In the Democratic primary, Jamaal Bowman, an outspoken anti-crypto congressional candidate, lost to pro-crypto George Latimer. Latimer’s campaign is believed to have received funding from cryptocurrency industry players. Democrats may be forced to adopt a more pro-crypto stance to secure campaign contributions and votes.
Short-Term Effects: Trading the News?
As the election season progresses, there will undoubtedly be opportunities to “trade the news.” This could take the form of temporary price spikes when Biden suffers setbacks, or when pro-crypto Democratic candidates gain an advantage.
Trading the news is a strategy used primarily by day traders, so it’s not for everyone. To do it effectively, you need to buy and sell at high speeds. Many experienced traders advise against this completely.
Long-term impact on cryptocurrency markets
At first glance, this all seems very bullish for crypto. If Trump wins, it could be a huge boost for crypto use in the US. Even if he doesn’t win, Democrats may be forced to become more crypto-friendly.
However, there are a few caveats. First, US presidential candidates are notorious for not honoring campaign promises. Just because a politician says they will support cryptocurrency doesn’t mean they actually will.
Second, the cryptocurrency markets are global. While the US is an important part of the markets, its influence is limited. As some US politicians and industry leaders have pointed out, if developments don’t happen in the US, they will happen in other countries.
Overall, the outcome of the election is unlikely to have any major long-term effects on the cryptocurrency markets as a whole. The growing crypto lobby, coupled with a growing number of cryptocurrency owners, will continue to have an effect on legislation regardless of who wins the election. Any effects the election does have will sooner or later be offset by market developments in other countries.
Effects on the US market
While the election may not have a major long-term impact on cryptocurrency as a whole, it could have a major impact on U.S.-based companies and projects. Pro-crypto voices argue that regulation will boost innovation and cryptocurrency-related jobs overseas. This criticism is absolutely valid.
Crypto skeptics are more concerned about issues like financial stability and preventing money laundering. If these concerns win out, it could cause the U.S. and U.S.-based companies to lose market share while boosting economies in places like Asia, the Middle East, the Mediterranean, and the Caribbean.
This could have implications for stocks like Coinbase (COIN) that deal directly with cryptocurrencies, as well as stocks like Microstrategy (MSTR) that hold Bitcoin as part of their capital reserve strategy. Much of Microstrategy’s price growth over the past two years has been due to its unconventional approach, so restrictive regulations could have a negative effect on the stock price.
Some crypto projects are largely based in the US; for example, Ripple (XRP), Algorand (ALGO), Paxos, Tether (USDT), and several others have their headquarters and most or all of their staff within the US. The prices of these tokens may suffer in a restrictive regulatory environment.
The biggest impact will likely be on future projects rather than existing ones, however. This is more about opportunities than risks — a more open regulatory climate will allow established players in the financial sector to expand into the crypto markets and boost their businesses. If a more open approach ultimately wins out, it will be worth keeping an eye on the first projects and companies to take advantage of it.
This article is by an unpaid outside contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.