US Election Dynamics and Crypto Futures in 2024
2024 is witnessing national elections in over 60 countries worldwide; among them, the US election stands out as particularly significant, especially for the crypto industry. In this article, we will discuss the current US election status and potential future influences on crypto.
On June 27th, 2024, the first United States presidential debates began. Post-debate commentaries did not focus on debate topics but rather on concerns about Biden’s disaster performance and whether he could continue his campaign.
Will Biden drop out of the election?
Concerns about Biden’s health surfaced as he showed symptoms of dementia during the debate, compounded by a leaked video of Jill Biden guiding Joe off the debate stage. These incidents sparked significant opposition to Biden’s re-election bid, including criticism from prominent figures like Elon Musk and hedge fund investor Bill Ackman.
Two days later, Bill O’Reilly claimed on his website that Biden might quit the campaign. However, Biden reassured his commitment, stating during a call with campaign staff, ‘I’m not leaving, I’m in this race until the end.’ Despite this, the situation remained challenging for Biden and the Democrats.
Currently, on Polymarket, the odds of Trump winning the 2024 election surged to over 60% after the first debate, establishing him as the frontrunner. Conversely, Biden’s odds dropped to 11%, with Kamala Harris emerging as a favored replacement at 17%. There is growing belief that Harris will likely replace Biden as the Democrats’ nominee, propelling the memecoin $KAMA to skyrocket.
How will the election influence the cryptocurrency market?
Despite uncertainties ahead, several potential outcomes can be expected. Trump, currently leading in the polls, has demonstrated a crypto-friendly stance throughout his campaign. Many believe that if Trump wins the election again, cryptocurrencies may experience a surge akin to the ‘Trump Trade,’ which refers to the simultaneous surge in U.S. stocks, Treasury yields, and the dollar that followed Donald Trump’s previous election victory.
In contrast, the Biden administration has proposed hostile legislative proposals, and numerous enforcement actions on crypto firms from a Democrat-run SEC have drawn harsh criticism from leaders in the crypto industry in recent years. However, Trump’s potential dominance might alter this regulatory attitude. Biden’s recent openness to the FIT21 Act and approval of ETH ETFs suggest a possible shift in attitude towards crypto. A possible strategic move for Democrats to garner support from the crypto community right now would be to push for the launch of ETH ETFs.
Moreover, increased liquidity in the cryptocurrency market is anticipated regardless of the election outcome. Biden is currently urging a reduction in inflation, aiming to prompt a pre-election rate cut from the Fed to bolster his economic credentials. In April, Biden stated, ‘I stand by my prediction that there will be a rate cut before the year is out.’ If the Fed implements one or two rate cuts by year-end, it could significantly increase liquidity across the financial markets, benefiting cryptocurrencies.
Regarding Trump, expectations of potential corporate tax cuts, similar to those enacted under the 2017 Tax Cuts and Jobs Act, and deregulation in the finance market make him favorable to Wall Street. Calvin Tse, head of macro strategy at BNP Paribas, notes, ‘Trump’s policies are largely inflationary (tariffs, fiscal easing), while he will likely appoint a more dovish-leaning Fed chair,’ suggesting potential liquidity increases in the financial market under a Trump administration.
However, in the meantime, it is important to note that in recent years, the biggest concern for the US market has been the huge fiscal deficits. Although both Biden and Trump are likely to maintain these deficits, investors should remain cautious as legislative changes or pressures from the bond market could prompt adjustments.
