The U.S. presidential elections are arguably
the most significant political event globally. Analysts are nervously
monitoring the campaign, trying to figure out the possible implications for
global risk assets. In this article,
Octa aims to investigate how the result of the U.S. elections can impact crypto
prices and the industry in general.
Another exciting year for the crypto market is
still in its making, with popular cryptocurrencies already showboating their
impressive price action so far. Most significant was Bitcoin’s move, as the
coin managed to break to a new all-time high level. Although corrected lower,
it still remains positive on a year-to-date basis. Crypto traders are keeping
an eye out for opportunities, especially as important economic and political
events are looming.
Admittedly, the U.S. elections are, without a
doubt, the key political event anticipated by politicians and investors alike
as the results can potentially rattle the financial markets. There are only two
possible outcomes—Trump or Harris. In this report, we will discuss each
scenario’s pros and cons based on how the crypto market could respond to each
situation and, in general, to the presidential elections.
Past presidential elections and crypto companies
In 2016, during the Trump-Clinton election
campaign, no major movement was observed within the crypto market as Bitcoin
advanced marginally after the results were announced. However, the crypto
market back then was not as developed as it is today. Its engagement by
investors and traders was not as vibrant as it is today, so a comparison may be
misleading.
Therefore, it is more relevant to look at the
Trump-Biden campaign of 2020. At that time, the market had already boomed
previously in 2017, but once again, risky assets like Bitcoin never really
budged. What is very different compared to previous elections is that now
cryptocurrency companies like Coinbase and Ripple are giving away a lot of
money to support candidates who are more likely to help the crypto industry if
elected. A report by CNBC
stated that crypto companies have dedicated some $119 million towards
influencing federal elections.
If Trump wins
Donald Trump has already included crypto as a
tool in his campaign. He made headlines while attending the Bitcoin conference
in Nashville in July. His sheer attendance at this event was already
extraordinary in its own sake and made it reasonable to consider him a
pro-crypto candidate of the elections.
At the conference, Trump made it clear that he
was supporting and embracing crypto technology, ending his negative views on
digital assets. He stated that if the U.S. doesn’t dominate the crypto market,
then China will, turning the matter into a geopolitical concern. Trump also
used the event to announce his plan to turn the U.S. into the ‘crypto capital
of the planet and Bitcoin superpower of the world’, making this statement a
highlight of his speech. The crowd welcomed the announcement and responded
positively to the news.
Trump understands that the crypto market has
come a long way since its beginning and that Bitcoin, Ethereum, and other coins
have gained tremendous value in the process. He is aware that crypto investors
have quadrupled within the past decade and that he can personally benefit from
these circumstances, as he admitted to accepting donations in Bitcoin[2].
Yet, putting aside the event,
Trump has not published his plans for crypto
in detail, making it challenging for us to examine his proposals clearly. ‘It
remains to be seen whether he is truly willing to support the crypto market or
if he is just trying to entice the crypto industry to support him and crypto
enthusiasts to vote for him. No matter the case, the main aspects of his speech
certainly coincided with the interests of millions of crypto investors
worldwide’, said Kar Yong Ang, Octa analyst.
If Trump’s plan actually materialises, it
could open the doors for further investment and expansion of the digital asset
market. Thus, for the reasons mentioned above, if Donald Trump wins in
November, we may see prices of cryptocurrencies appreciating in value—possibly
substantially. ‘I will not be surprised
if BTCUSD sets a new all-time high in 2025’, said Kar Yong Ang, a financial market analyst
at Octa Broker
If Harris wins
Unfortunately, Kamala Harris’s plans for the
cryptocurrency industry remain unclear thus far. Harris has refrained from
making public announcements regarding cryptocurrencies, which could be regarded
as a sign of her skeptical approach towards the subject. Moreover, Harris is
currently the U.S. Vice President (VP), which, in a way, keeps her tied to the
current Biden administration, which has not been particularly friendly to the
crypto market.
However, according to a Bloomberg report,
various important figures in the crypto industry have already approached the
Harris campaign and shared their opinions and concerns over the industry. This
may suggest that Harris is willing to be flexible on the matter as opposed to
the Biden administration. This also tells us that Kamala Harris understands the
importance of cryptocurrencies, especially given that 40% of American adults
own digital coins.
In August, the Democratic party organised a
virtual town hall event featuring the ‘Crypto4Harris’ motto. During the event,
Chuck Schumer, a prominent Democratic senator, claimed that passing legislation
favouring the crypto market may be feasible before the end of 2024[4].
Other than that, traders have little to work with.
From another angle, Harris is already in a
position to take action to support crypto. As a VP, Harris already has the
power to influence the crypto market with her actions or simple general
support.
‘For
the time being, Harris has remained quiet on the matter, which could lead some
to assume she keeps a negative stance on the crypto market. However, precisely
because she does not have a principal position yet, her sentiment could change
instantly. In my personal view, Kamala Harris will be under pressure to open up
on her plans for the crypto market, which is also a great way for her to
attract more votes’, said Kar
Yong Ang, a financial market analyst at Octa Broker.
Proceed with caution
In another scenario, if the election keeps
traders in suspense and the final results are delayed, then cryptocurrencies
could come under extensive volatility with wide price swings coming into play.
Indeed, one of Bitcoin’s characteristics is performing large price movements
unexpectedly.
This behaviour has been observed multiple
times in the past, and the presidential elections can create the necessary
impulse for strong moves of large magnitude. An uncertain outcome of the
presidential elections may lead to increased risks for traders, but it can
equally create great openings for profits.
More specifically, if Bitcoin tests important
technical levels, such as 50,000 or 63,000, it could be useful for traders to
set up strategies that consider these levels when opening or closing trades.
Being mindful of such trading levels can also help when using pending orders.
Another example could be XRPUSD, an asset that has been moving sideways in
2024. Some traders could identify how wide this range can go and open trades
only when important levels are reached.
Conclusion
From a trading perspective, it is vital for
traders to monitor the crypto markets’ reactions to important events as we get
closer to the elections. September and October could set the tone for the
actual impact in November when the results are announced. Also, keep in mind
that September has traditionally been a bearish month for Bitcoin, as since
2019, we have seen four red months and only one green month.
In addition, the market awaits a crucial FOMC
meeting due on 18 September. This event will be very interesting as the odds
are stacked for a possible rate cut. Another big event to monitor is the
presidential debate on 11 September at 1:00 a.m. UTC. Harris and Trump may
discuss important themes in the 90-minute discussion, including their stance on
the crypto industry. BTCUSD may move sharply during the debate due to its
inherent volatility.
On balance, it is clear that U.S. politicians
can no longer ignore the crypto industry. Lots of crypto money has been
invested in the elections because crypto companies depend on the results of
these elections. Some of these firms are going through intense legal battles,
which could even lead to an existential threat.
So, these firms clearly understand that the
president coming into power will have the responsibility to upgrade regulations
and support the industry. The crypto industry’s longevity and expansion now
truly depend on the policies that the newly elected president of the U.S. will
pursue.
About
Octa
Octa is an international broker that has been
providing online trading services worldwide since 2011. It offers
commission-free access to financial markets and a variety of services used by
clients from 180 countries who have opened more than 52 million trading
accounts. To help its clients reach their investment goals, Octa offers free
educational webinars, articles, and analytical tools.
The company is involved in a comprehensive
network of charitable and humanitarian initiatives, including the improvement
of educational infrastructure and short-notice relief projects supporting local
communities.
Since its foundation, Octa has won more than
70 awards, including the ‘Best Forex Broker 2023’ award from AllForexRating and
the ‘Best Mobile Trading Platform 2024’ award from Global Brand Magazine.
This article was written by FL Contributors at www.forexlive.com.
