Regulation
A “Cryptocurrency Ally” Is Coming to the White House
Both Trump and Harris Seem More Crypto-Friendly… SEC Chairman Gensler May Be About to Leave… Luke Lango Calls for Big Tech Resurgence… AI Trading 2.0
Gary Gensler is the most hated man in the cryptocurrency industry.
Gensler, the chairman of the Securities and Exchange Commission, has sued Coinbase, the largest U.S. cryptocurrency exchange, as well as Binance and Kraken… he has attacked various cryptocurrency tokens like Ripple (XRP), seeking to treat them as unregistered securities… and his general attitude toward cryptocurrencies has been so hostile that it has drawn rebukes from politicians. One of the most recent examples was Congressman Tom Emmer, who spoke at the Consensus Conference, an annual conference for the cryptocurrency and blockchain community, in the spring, saying:
Gary Gensler was the worst thing that could have ever happened to the SEC. He has far exceeded his authority. He literally violates the SEC’s mission every day…
His open-door policy is the biggest, you know, gimmick that ever existed. It’s literally, come in, tell me what your plan is, and then we’ll sue you.
Well, over the weekend, when Republican presidential candidate Donald Trump delivered the keynote address at the Bitcoin Conference in Nashville, he said that if he won the White House in November, he would fire Gensler on day one.
The comment drew thunderous applause from those present.
Here are more statements from Trump:
This afternoon I will lay out my plan to ensure that the United States becomes the cryptocurrency capital of the planet and the world’s Bitcoin superpower, and we will succeed.
There will be rules, but from now on the rules will be written by people who love your industry, not hate it.
Trump made a handful of promises in his keynote address, all of which were very bullish for cryptocurrencies.
In addition to promising to fire Gensler, Trump said he would:
- Create a “National Strategic Bitcoin Stockpile”
- Create a Presidential Advisory Council to Design Transparent Cryptocurrency Regulation
- Stop work on a central bank digital currency, which many in the cryptocurrency community see as a threat to the entire purpose of digital currencies (going beyond government-issued currency and centralized control)
- Promoting stablecoins, as Trump claimed they would help extend the dollar’s dominance around the world
- Commit the sentence of Silk Road founder Ross Ulbricht (Silk Road was the first major platform for cryptocurrency traders).
Between the speech and early Monday, bitcoin jumped, nearly reclaiming $70,000 and hitting its highest level since mid-June.
It has since been withdrawn over fears that the U.S. government could flood the market with $2 billion in bitcoin seized from the defunct Silk Road platform.
Even if Vice President Harris were to take the White House, recent reports suggest she would be more supportive of the cryptocurrency industry than President Biden has been.
Let’s move on to Fortune Crypto:
Advisers to Vice President Kamala Harris’s campaign have reached out to major cryptocurrency players to develop relationships that could later inform a regulatory framework, sources told the Financial Times.
According to the report, this outreach effort has involved cryptocurrency exchange Coinbase, stablecoin firm Circle, and blockchain payments firm Ripple Labs in recent days.
A source told the FT that the message Harris wants to convey is that Democrats are “pro-business, responsible business.”
His rise to the top of the Democratic presidential ticket is also seen as an opportunity to repair ties with the tech sector, after the Biden administration’s regulatory stance created a backlash in what has traditionally been a more progressive sector.
On Friday, Ripple CEO Brad Garlinghouse posted a speech by Rep. Brad Sherman attacking the cryptocurrency community. Garlinghouse added the comment, “It would behoove Vice President Harris to not listen to (and distance herself ASAP) people like this who spout absolute nonsense.”
He then went on to write:
Democrats are not getting votes for being anti-cryptocurrency (and therefore anti-innovation), while Republicans are getting votes for embracing and encouraging innovation here in the United States.
It is time to catch up with many other leading economies and governments that have clear rules to follow.
While Harris isn’t as big a cryptocurrency advocate as Garlinghouse would like, this is a step in the right direction.
Bottom line: A warmer relationship with the crypto community seems to be an area of overlap between Trump and Harris. So while we expect a lot of volatility, we recommend holding on to your cryptocurrencies.
Meanwhile, Gary Gensler might want to update his resume.
Changing the subject and analyzing the technology sector more broadly, one wonders: are we on the brink of a new technological crisis?
As we’ve covered here in the Digest, the last two weeks have brought about a historic rotation of technology stocksin small-cap stocks. Between July 11 and July 25, the Nasdaq fell 8% while the iShares Russell 2000 small-cap ETF jumped more than 8%.
Source: StockCharts.com
But if our tech expert Luke Lango is right, we’re about to see a major tech renaissance. As he writes below, there are four key elements that support his optimism:
- Earnings are strong because companies are spending billions to build and integrate new AI products and services. We believe this trend should continue because AI adoption at both the enterprise and consumer levels remains low and will only increase in the coming quarters and years.
- Inflation is falling toward the Fed’s 2% target, and in fact, it’s almost there. It should continue that way. Business surveys suggest that, in general, companies have stopped raising prices. Meanwhile, commodity prices, such as oil and copper, have been in free fall in recent weeks.
- The outlook for Fed rate cuts is improving, and we think it will stay that way. With inflation back to nearly 2% and the labor market starting to creak, it seems likely that the Fed will cut rates several times over the next six months.
- The economy is growing at a healthy pace. And with inflation and interest rates set to decline in the coming months, the U.S. economy should only get stronger going forward.
Focusing on Luke’s point about earnings and AI, this is a great week.
Four of the largest large-cap tech players driving the AI bull market report earnings.
We have Microsoft reporting after the closing bell today (results should be in by the time you read this). Tomorrow is Meta. And on Thursday, we have Apple and Amazon.
Investors are looking for evidence that the AI boom isn’t just a hoax. Luke expects we’ll get that proof with the strong earnings coming. In fact, he’s buying the best AI Actions Today:
We like high-quality AI stocks on this dip. They have been at the epicenter of all the recent sell-off, so they will likely be at the epicenter of the next rebound as well.
Think of names like Nvidia (NVDA), Super Micro (SMCI) and Arm (ARM). All are down about 10% from last month.
However, AI companies are largely reporting strong earnings. And those strong fundamentals will create robust demand for those stocks in this recovery.
That said, Luke believes we are at a tipping point in the AI boom.
In particular, we are entering a new phase in which artificial intelligence software actions will take the lead in the artificial intelligence revolution.
Louis Navellier and Eric Fry share this view. To help investors navigate this shift, these three experts released their latest AI research on the opportunity last Friday. It’s part of a special briefing you can access right here.
Let’s get back to Luca on this change:
The AI revolution is entering a new phase, shifting focus from hardware to software.
Companies like Nvidia have already made significant gains in this second phase… but the real opportunity lies in identifying the next Amazon, Netflix, or Microsoft of the AI era.
Again, to read the full briefing, Click here.
Finally, an AI recovery could see a huge boost tomorrow if the Fed appears as dovish as hoped.
The Federal Reserve wraps up its July meeting tomorrow. Wall Street expects Chairman Jerome Powell to sound dovish in his press conference, all but confirming September rate cuts (and hopefully announcing more later in the year).
If Wall Street adopts this dovish version of Powell, we’ll expect a resurgence of mega-cap AI stocks, as Luke suggests.
We will keep you posted.
Good evening,
Jeff Remsburg