Regulation
What does the 2024 US presidential election mean for cryptocurrency markets?
With cryptocurrency markets recovering this year, cryptocurrency is set to become a bigger election topic than ever. Some Education They estimate that 15.6% of Americans own some cryptocurrency.
That’s over 50 million potential voters. Some analysts even think that voters who own cryptocurrencies could influence the elections.
What does this mean for cryptocurrency prices? And how can we profit from it?
Context: The “War on Cryptocurrencies”
Since the early days of Bitcoin, the cryptocurrency has had many enemies. Many of the most outspoken critics of Bitcoin and other cryptocurrencies have been members of the United States Democratic Party.
Among these, the most important is Elizabeth Warren, who cited concerns on Iran and North Korea using cryptocurrency and asked stronger regulationBiden has I placed the veto a law that would allow banks and other financial sector companies to hold Bitcoin and other cryptocurrencies.
The Biden administration even went so far as to publish a relationship attacking Bitcoin’s Proof of Work consensus algorithm and advocating a central bank digital currency (CBD)The Department of Justice, under Biden, also arrested 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 are seen as anti-crypto. As a result, when Biden had a poor performance in his first debate with Trump, the price of Bitcoin jumped more than 1% over the course of the 90-minute debate.
Trump Chases ‘Crypto-Vote’
Trump saw a huge opportunity in Democrats’ aversion to cryptocurrencies. Although he had previously called cryptocurrencies a scam, he has now made a major U-turn.
The Republican Real Estate Magnate became the first presidential candidate to accept campaign donations in Bitcoin, along with Ethereum, Solana, Dogecoin and… Shiba Inu. Yes, Shiba Inu coin.
Trump has made a series of bold statements, including “ending Biden’s war on cryptocurrency” and ensuring all remaining Bitcoin is mined in America. That sentiment echoes many industry leaders, who argue that excessive regulation will only drive innovation abroad and ultimately hurt America.
Trump has promised to build a “crypto army” to lead his campaign to victory.
Will Democrats Fight Back?
Trump’s move has unsettled some Democrats. A growing movement within the Democratic Party is also calling for embracing cryptocurrency. Chuck Schumer and 10 other Democratic senators have approved a bill rolling back some onerous cryptocurrency regulations. Biden vetoed the bill.
However, the cryptocurrency lobby is also growing stronger and exerting influence on Democrats. Some reports say that cryptocurrency companies have pooled 160 million dollars for campaign contributions.
In the Democratic primary, Jamaal Bowman, an anti-crypto candidate for Congress, lost to pro-crypto George Latimer. Latimer’s campaign is believed to have received funding from cryptocurrency industry players. Democrats may be forced to take a more pro-crypto stance to secure campaign contributions and votes.
Short-Term Effects: Trading What’s New?
As election season unfolds, there will undoubtedly be opportunities to “trade the news.” This could take the form of temporary price increases when Biden suffers setbacks or when pro-crypto Democratic candidates gain the upper hand.
Trading the news is a strategy used primarily by day traders, so it is not for everyone. To do it effectively, you need to buy and sell at very high speeds. Many experienced traders advise against it completely.
Long-term impact on cryptocurrency markets
At first, this all seems very bullish for cryptocurrency. If Trump wins, it could be a big boost to cryptocurrency use in the US. Even if he doesn’t win, Democrats may be forced to become more crypto-friendly.
However, there are a couple of caveats. First, US presidential candidates are notorious for not honoring their campaign promises. Just because a politician says they will support cryptocurrency doesn’t mean they will.
Second, cryptocurrency markets are global. Although the United States is a major part of the markets, its influence is limited. As some US politicians and industry leaders have pointed out, if development does not happen in the United States, it will only happen in other countries.
Overall, the outcome of the election is unlikely to have any major long-term effects on cryptocurrency markets as a whole. The growing cryptocurrency lobby, along with a growing number of cryptocurrency holders, will continue to have an effect on legislation regardless of who wins the election. Any effects the election has will be offset sooner or later 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 US-based companies and projects. Pro-crypto voices argue that regulation will drive innovation and crypto-related jobs overseas. This criticism is absolutely valid.
Cryptocurrency skeptics are more concerned about issues like financial stability and preventing money laundering. If these concerns prevail, it could cause the United States and U.S.-based companies to lose market share, while strengthening 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 in cryptocurrency, 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 their unconventional approach, so restrictive regulations could have a negative effect on their stock price.
Some crypto projects are mostly based in the United States; for example, Ripple (XRP), Algorand (ALGO), Paxos, Tether (USDT), and many others have their headquarters and most or all of their staff in the United States. The prices of these tokens could be affected in a restrictive regulatory environment.
However, the biggest impact will likely be on future projects rather than existing ones. This is more about opportunities than risks: a more open regulatory environment will allow established financial industry players to expand into cryptocurrency markets and grow their businesses. If a more open approach finally prevails, it will be worth keeping an eye on the first projects and companies that will take advantage of it.
This article is by an unpaid contributor. It does not represent reporting by Benzinga and has not been edited for content or accuracy.