At the beginning of June, analysts at Standard Chartered predicted that Bitcoin (BTC) would reach $100,000 by November on the back of the US presidential election, which has become the main driver of the cryptocurrency's recent growth. Moreover, the bank predicts Bitcoin will soar to $150,000 if Donald Trump wins the election.
Many members of the crypto community also believe that Donald Trump's victory will lead to the loosening of regulations and an increase in cryptocurrency capitalization. In this article, we will analyze how the current state of American politics may affect the value of Bitcoin and the entire cryptocurrency market.
Background
Cryptocurrency prices fell despite Trump's positive comments and there are several reasons for it:
- The US Federal Reserve kept interest rates at 5.5% but said they might fall in September if inflation drops.
- Mt. Gox and Genesis Trading transferred large amounts of Bitcoin and Ether as part of bankruptcy proceedings, which could mean more supply in the market.
- Mixed US labor market data raised fears of recession.
Other circumstances
The stock market also fell: the S&P 500 fell by 2.06% and the Nasdaq by 3.06%. The VIX index rose 46% in two days to 22.85, reflecting uncertainty and panic.
The BTC/USDT pair has been trading sideways since 14 March 2024, with a range of 28%. Sellers passed $60,000. On 5 August, the collapse got worse. The breakdown of $56,765 led to a decline to $49,000.
The cryptocurrency sector saw a huge sell-off of long positions worth almost $889 million. Bitcoin fell by 14%. The stock market is also struggling. The Japanese Nikkei index fell by 8%, and shares of Japan's largest banks lost 13-15% of their value. In the US, the Nasdaq index is down 3%, and the sell-off continues. South Korea suspended all share sale orders due to the global sell-off. Goldman Sachs raised the probability of a recession in the US to 25%.
Regulatory environment
The United States of America has one of the most complex and multi-layered approaches to regulating cryptocurrencies. At the same time, the U.S. government's domestic policies in many different areas of life can influence the formation of legal approaches outside of the United States itself because of its cultural and political influence.
In the US, cryptocurrencies are treated as a commodity and regulated by bodies such as the SEC (Securities and Exchange Commission) and CFTC (Commodity Futures Trading Commission). Cryptocurrency companies are required to follow strict anti-money laundering and customer identification (AML/KYC) regulations. This does not always fit within the limits set by regulators. For example, cryptocurrency exchanges must register as financial institutions and comply with legal requirements, making the market more transparent and secure.
The current situation could change significantly if Trump comes to power. He has openly supported the Web 3 community and accepts donations in cryptocurrency.
Recent political events and their impact on cryptocurrency market
Recent political events have underscored the potential influence of the election on the crypto market. For instance, Bitcoin experienced a notable surge in value as Biden left the presidential post, increasing the likelihood of Trump's victory.
Trump's evolving stance on cryptocurrency, including support for a U.S. Bitcoin reserve, has resonated with investors, leading to optimism about the future of digital assets under his leadership. Conversely, the Democratic Party's more cautious approach has raised concerns among crypto enthusiasts, particularly with Senator Elizabeth Warren advocating for stricter regulations.
Key Political Figures
Some politicians are influencing how people think about cryptocurrency in the 2024 election:
- Donald Trump: The former president is now more supportive of cryptocurrencies, particularly Bitcoin. His idea for a U.S. Bitcoin reserve has got people talking, and his campaign has asked the crypto community for money.
- Kamala Harris: New Trump's opponent is pressured to be more supportive of crypto. Some Democrats are talking about changing the party's approach to digital assets. Harris supports regulating financial markets and cryptocurrencies. She wants to create clear regulations for the crypto industry, which could make it more stable and legitimate.
- Ron DeSantis: The Florida Governor is against central bank digital currencies (CBDCs) and wants a decentralized financial system. His pro-crypto stance has won over voters who value financial freedom.
- Vivek Ramaswamy: The Republican candidate has taken a strong pro-crypto stance. He says Bitcoin should not be classified as a security. His campaign accepts Bitcoin donations. This shows he is committed to the digital asset space.
Votes of the crypto community
The upcoming United States presidential election is currently being actively discussed around the world. The new head of state will set the policy towards the markets, including the cryptocurrency market, which should be considered by investors. As interest in cryptocurrencies grows across the board, including among Americans, politicians are beginning to change their stance on digital assets and can no longer ignore the issue.
The importance of politicians' attitudes towards the cryptocurrency market was highlighted by a poll conducted in May 2023 by Michael Saylor, chairman of Microstrategy - the largest holder of bitcoin (over 214k as of June 2024). He asked whether Donald Trump's stance on Bitcoin was a deciding factor for voters, and over 80% of respondents answered affirmatively.
Donald Trump seems to understand the concept of cryptocurrency, and even using it in his campaign – his headquarters accepts donations in Bitcoin and Ether, and the candidate himself was even dubbed the "cryptocurrency king" for his $10 million fortune in digital assets at the end of May. However, this has not always been his view on cryptocurrencies.
As president, he ordered the US Treasury to "kill" Bitcoin, calling it a fraud. However, a few years before the election, his attitude changed: in late 2022, Trump issued his first collection of NFT tokens, and in 2023, he invested $500 million in crypto. Now, in a meeting with voters, Trump explicitly urges them to vote for him "if you like cryptocurrency in any form.”Matthew Siegel, head of digital asset analysis at investment firm VanEck, said back in March that the upcoming US presidential election could have a significant impact on the crypto industry, with the change in leadership favoring the industry as Joe Biden's administration made it harder for banks and brokers to work with cryptocurrencies.
However, even though his staff before the election began to take digital assets more seriously, in late May, the US Senate approved several cryptocurrency-related bills, and the SEC suddenly launched an emergency process to approve exchange-traded funds for Ethereum, which the organization has not allowed for more than six months.
A stance on cryptocurrencies could play a significant role in the 2024 election. Observers note that cryptocurrency-friendly policies could influence voters, especially those involved in emerging technology and financial sectors.
Historically, some Democrats have been critical of cryptocurrencies, which could affect the party's appeal among cryptocurrency enthusiasts. Note that figures such as Senators Cynthia Lummis and Kirsten Gillibrand have become exceptions in the party by actively engaging with the crypto community.
Experts opinions and future outlook
Important levels have been passed and there is no telling where the fall will stop. After $50000, the nearest support level is at $45000, but this will be all the signs of cryptozyme, which is caused by mass liquidation of longs and flight from risky assets.
Further dynamics of cryptocurrencies will depend on the development of the situation in traditional financial markets and the actions of regulators. It takes a couple of days to stop the bleeding and realize how bad it is. There are no bounces, and this is before the US market opened after Friday and spot ETFs were sold.
Conclusion
As the 2024 U.S. presidential election approaches, the cryptocurrency market is at a crossroads. The election could bring a new era for digital assets, either encouraging growth or limiting innovation. With candidates talking about cryptocurrency to get votes, it's important. The crypto community is watching the election, as the results could change the rules and the market. In these "interesting times," the link between American politics and cryptocurrency will be a big story in the months before 5 November 2024.
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