How The US Election Will Impact The Crypto Market?

All the attention of market participants is currently focused on the presidential election of the United States. The quadrennial event is considered to have a huge impact on the economy and the investment world.

In fact, the fate of the crypto market is also influenced by who will be elected as the US president.

2024 US Elections At A Glance

In this election, former 45th US President Donald Trump, who is supported by the Republican Party, will face the incumbent president Joe Biden, who is supported by the Democratic Party.

At least, there are three policies that have an impact on the behavior of global investors and the crypto sector. The first is policies related to geopolitical issues. This problem is one of the causes of the sluggish global economy due to the uncertainty caused. If the elected president can improve the situation, the global economy will undoubtedly start to improve.

The second is the issue of interest rates. The Fed has so far still applied high interest rates as an effort to suppress inflation. Although inflation has eased, the Fed has not lowered its interest rates. High interest rates make companies reluctant to expand their business. On the other hand, the flow of investment funds has also been stalled due to these conditions. A more accommodative interest rate policy is considered to be a stimulus for economic growth and money circulation.

Crypto Agenda In The 2024 US Election

The third is policies related to crypto regulation. So far, the US has been quite harsh on actors in the crypto industry. In addition to strict regulations, summons or detention of major crypto figures have also occurred in recent years. It will be interesting to see what kind of policies the president-elect will take towards the crypto industry.

On the one hand, the crypto community now has considerable influence on the map of US election competition. One of the interesting findings comes from Coinbase's Impact Research conducted in June 2024. It is known that the composition of voters who are crypto owners is divided into three camps where the portion is equal.

As many as 35% of correspondents said they would likely vote for the Democratic Party, then as many as 34% would vote for the Republican Party. The rest, namely 31%, have not made a choice, aka swing voters.

Thus, the niche of the crypto community that can be pursued by each candidate is quite large. If the election is tight, the existence of swing voters will be crucial. It is important for presidential candidates to be able to attract sympathy from these swing voters in order to smooth their path to becoming the number one person in the US.

Policy Position of the US Presidential Candidate

The following are the positions and policy directions of US presidential candidates based on their campaigns or approaches during their presidency:

Policy Position of the Grand Old Party (GOP) or Republika

Geopolitical. Trump showed his disapproval of some of the current geopolitical conditions. In his campaign, Trump promised to dampen geopolitical tensions. He demanded a ceasefire between Russia and Ukraine as well as Israel and Palestine.

Interest. As a businessman, Trump is in a position opposite to the direction of the Fed's policy.

Crypto. Trump has very clearly shown his position in supporting the crypto industry. Starting from criticism of Biden for having a repressive policy on crypto, campaign promises to ensure regulations that support the crypto sector, and his involvement in crypto events (BTC Conference 2024).

The Influence of the US Election on the Crypto Market

Beyond economic and crypto policies that have a direct impact, historically U.S. elections have tended to lift the prices of risky assets, including crypto. Elections often present incentives for dynamic market changes as well as growth incentives. This happened due to an increase in the amount of money supply in circulation.

When the money supply increases, it will encourage monetary inflation. Historically, risky assets such as stocks and BTC have tended to experience price increases when monetary inflation occurs. This is likely to happen again after this election. Not surprisingly, many believe that this agenda is a positive sentiment for the crypto market.

BTC price movements have historically also correlated with these assumptions. Obama's victory in 2012 pushed the price of BTC up from $8 to $820. Then, Trump's victory in 2016 also managed to make the price of BTC jump from $670 to $17,350. Most recently, Biden's victory in 2020 brought the price of BTC up from $15,000 to $30,000 and the market capitalization of another crypto for the first time reached $1 trillion.

What are the conditions for this election? It is difficult to guess exactly what the increase will look like. However, the rise in BTC and other cryptos is believed to be more significant when Trump succeeds in becoming its president. As previously explained, Trump has been the most vocal in showing his support for crypto so far.

One indication is the shooting incident that befell Trump on July 13, 2024. Polymarket, a blockchain-based prediction platform, showed that Trump's prediction of victory immediately rose from 60% to 71% after the shooting. The crypto market also reacted positively to the news.

Bitcoin, which had previously been held below the $58,000 zone for eight days, immediately rose to break through the $65,000 area. The increase is inseparable from the sentiment of the increasing chances that Trump will be elected as US president. After the incident, BTC also managed to turn the $62,762 level which was previously an important resistance into a support level.

In addition to BTC, Trump-themed memecoins also experienced an increase after the incident. For example, TREMP which rose up 80% to $0.72 or MAGA Trump which rose more than 40% past $10. In addition, other Trump memecoins such as MAGA Hat, Super Trump, and others have also increased. It's just that the increase did not last long and the price gradually decreased.