"Creators Say" is a dialogue column launched by Foresight News . We will ask outstanding creators selected every month about hot market topics and compile the collected results into articles, draw on opinions from all sides, and discover more in-depth thinking.
Written by: Foresight News Outstanding Content Creator of July 2024
Compiled by: Foresight News
As the US presidential election approaches, cryptocurrencies are increasingly closely linked to the volatility of US politics, and have gradually become an important bargaining chip for obtaining votes and financial support in US political elections. Not only that, the participation of US presidential candidates Trump, Robert Kennedy Jr., and several US senators has made the Bitcoin Conference grow from a forum that only technology geeks pay attention to to a political stage where politicians gather. The era when cryptocurrencies were marginalized in politics is gone forever. So, can this year be a key year for cryptocurrencies to go mainstream?
The theme of this issue of "Creators Say" is "The year of the US election, a key year for cryptocurrency to go mainstream?" We have invited AiYing Compliance , Cycle Capital , 4Alpha Research , Crypto Market Watch , Lawyer Chen Shanghai , Chakra Research and Jeffrey Ding, who were listed on the Foresight News Outstanding Creators List in July 2024, to join the discussion in this issue.
Around the topic of "US election", we raised five questions: "What are the trading opportunities?", "What benefits will Trump's election bring to the crypto industry?", "How credible are Trump's promises at the Bitcoin Conference?", "What do you think of the saying that you should not blindly support "crypto-friendly politicians"?" and "Is it good or bad for cryptocurrencies to be closely tied to politics?" Here are the answers we collected:
1. The US election has become a hot trading topic in the crypto industry. What trading opportunities do you think there are? Are you involved?
AiYing Compliance: For traders, as long as there are market fluctuations, there are trading opportunities. The market fluctuations caused by the election can also be felt during this period. After Trump's continuous voice, Bitcoin went straight to 70,000, and then fell below 50,000 due to the liquidity tightening of stocks, bonds and foreign exchange in the traditional financial market. This is not necessarily a definite causal relationship, but my personal subjective causal judgment. The cause and effect behind it may not be true in a short time, but what is certain is that there are various black swan events in the current market, whether it is geopolitical, economic, or election. Therefore, single technical analysis and analysis of a certain event will basically become the noise and bias of your trading, causing your trading strategy to fail. For me personally, the national credit currency has actually begun to reverse since the debt of the US dollar has expanded year by year to the day when it is impossible to repay. Everyone will think about what is the real currency, and I personally choose gold and Bitcoin. Since I have chosen, the best strategy is to invest regularly.
Cycle Capital: Different ecosystems have different election concept meme coins, including PEOPLE, MAGA, DJT, etc. The ones with larger market capitalizations include PEOPLE, MAGA, DJT, etc. One observation is that there are more diamond hands in the ETH ecosystem. Therefore, when choosing tokens, we should observe the stability of the chips and look for more sustainable targets that are more suitable for long-term holding. I only participate in short-term phases.
4Alpha Research: When it comes to trading opportunities during the US election, we can discuss it from two aspects: one is the concept coins related to the election, such as Trump concept meme coins MAGA ($TRUMP), Doland Tremp ($TREMP), Dark MAGA ($DMAGA), etc., and Biden concept meme coin Jeo Boden ($BODEN) (although the coin has basically cooled down); the other is mainstream coins with high market value, such as BTC, ETH, SOL, etc.
First, let's look at election concept coins. This type of coin often makes people experience fluctuations of heaven and hell. For example, a gunshot on July 13 caused Doland Tremp ($TREMP) and MAGA ($TRUMP) to rise by 87% and 53% respectively in a short period of time, while Jeo Boden ($BODEN) fell by 25%; with Biden's official withdrawal from the election, $BODEN completely returned to zero, while the dark Trump Meme coin Dark MAGA ($DMAGA) soared nearly 100 times. Investing in these Meme coins has both risks and opportunities. It is possible to get rich overnight, but it is also possible to return to zero in an instant.
At present, Trump has a high probability of being elected as the next US president. In this case, betting on Trump-related meme coins may be a wise choice, because news favorable to Trump tends to drive the increase of these coins. However, as the campaign progresses, negative news about the candidates may appear, which may also have a greater impact on some meme coins. Therefore, it is recommended that you be cautious in allocating such high-risk assets.
Next is BTC and mainstream Altcoin, which account for the largest proportion of my holdings. Although political events have less impact on them than election concept Meme coins, they still have an impact. For example, the same shooting incident caused Bitcoin, which had been silent for two weeks, to quickly rebound to more than $60,000 and continue to break through in the future. However, the current market is still in a period of volatility, and the market may undergo multiple adjustments before the Fed's possible interest rate cuts and the election. Therefore, I think a more appropriate strategy is to buy at the market low. For example, the price of Bitcoin has basically fluctuated between $55,000 and $70,000 in the past three months. You can consider buying in full at the low point of $55,000 to $60,000, and then selling at the high point of $68,000 to $70,000. As for whether to participate in contract trading, it depends on personal risk preference, which will not be discussed in depth here.
Crypto market observation: In the short term, Bitcoin may be accepted by more mainstream institutions. In the medium and long term, RWA/crypto payment, etc. There are opportunities in areas that are hindered by policies. Ordinary people can only participate in a limited way, so they just need to hold on to their chips.
Lawyer Chen in Shanghai: I think ETH spot ETF and RWA may be quite popular. The approval of ETH spot ETF is a sign that cryptocurrency has entered mainstream finance, while RWA is a combination of real assets and decentralized finance, which is more imaginative.
Chakra Research:
Jeffrey Ding: Three trading opportunities with different risk levels. Choose the one that best suits your style:
- Bitcoin has a medium risk level. As an expected indicator of US dollar liquidity, it will affect US dollar policy along with the US election, and thus have a relatively large impact on Bitcoin.
- The "third ETF" token has a higher risk level. As the election results come out, the expectations of cryptocurrency policies getting better/worse are changing (Trump or the Democratic Party). The third potential US ETF will have early market speculation and reaction as the election expects cryptocurrency policies. The main candidates include SOL, BCH, LTC, etc.
- Various meme coins or prediction markets with themes of presidential candidates have extremely high risk levels. This investment transaction is similar to gambling, betting on the results of the US election. Although the nominal return may be huge, the risk is extremely high, and it is better to go to a legal Macau casino. It is not recommended to participate.
2. After Trump supported Bitcoin, he gained the support of almost everyone in the crypto industry. What benefits do you think Trump's election would bring to the crypto industry?
AiYing Compliance: In fact, whether Trump or Harris is elected, both parties will be friendly to the crypto industry. There are many crypto companies on the supporter lists of both parties, but this part of Trump's supporters is particularly prominent. Naturally, if Trump is elected, he will also need to give more back to these companies. It is highly likely that the legislative push will be more obvious, avoiding internal friction among various regulatory departments and providing a unified regulatory framework.
Cycle Capital: First, the long-awaited relaxed regulatory environment in the crypto world. If Trump supports Bitcoin and promotes relaxed regulatory policies, it may bring more innovation and growth space to the cryptocurrency industry and reduce unnecessary compliance burdens. Secondly, a clear legal framework may be introduced during Trump's term. The Trump administration is likely to promote the formulation of a clearer and more friendly cryptocurrency legal framework to help crypto companies and investors better operate and invest in the U.S. market. The greater role is that his remarks on the openness of crypto will give investors great confidence, accompanied by more intensive hype opportunities.
4Alpha Research: Even if Trump cannot fulfill his promise at the Bitcoin Conference, his attitude towards Bitcoin and his style of doing things can attract more attention and funds to the crypto industry, which is the most significant benefit. Other benefits may still depend on the implementation of the final policy. What we are looking forward to is the relaxation of regulatory standards and the affirmation and consolidation of Bitcoin's status. It will still take a long time for Bitcoin to become a "digital gold" with universal consensus. I hope he can accelerate this process.
Crypto market observation: Republicans generally prefer small government, and it would be nice if they could manage less. We don’t dare to expect substantial progress, as long as big banks support deposit tokens and crypto payment settlements, that’s enough. The ecosystem behind it will develop on its own.
Lawyer Chen in Shanghai: Trump is not averse to new things. His election may help the crypto industry integrate into mainstream U.S. finance.
Chakra Research:
Jeffrey Ding: Trump will deliver on his promises if elected, especially what he can do immediately: firing the SEC chairman and establishing a presidential special committee on cryptocurrency. In addition:
- Bitcoin mining will be boosted and listed mining companies will receive better energy policy support.
- Crypto-finance legislation is accelerating. Bills on token financing and the approval of other crypto ETFs are all on the agenda.
- Confidence boosted. As a reserve asset of the US government, Bitcoin may not pass relevant bills soon, but everyone's confidence in it will increase.
3. Trump made many crypto-friendly policy promises at the Bitcoin 2024 conference, including supporting Bitcoin mining, incorporating Bitcoin into national reserves, and supporting cryptocurrency innovation. Which one excites you the most? Do you think Trump's promises are reliable?
AiYing Compliance: This is undoubtedly the inclusion of Bitcoin in the national reserve. After all, I am a firm believer in Bitcoin. The butt determines the head, but this is also the ambition of Bitcoin at the beginning. If this proposal is really passed, it means the re-opening of the era of currency standard and gold standard. The monetary system will return to the original starting point again. Other policies can be ignored because they are all side dishes, or just evolutionary processes rather than goals.
As for whether the promises will be fulfilled, it is highly likely that this will not be a problem, or these issues have little to do with who takes office, because they will most likely be fulfilled. These policies are actually driven by capital, and the two parties also have a consensus on crypto-friendliness, but the struggle for power has not yet ended.
Cycle Capital: The inclusion of Bitcoin in national reserves must be the most exciting, which means that countries with BTC reserves are regarded as more trustworthy trading partners in international trade. The United States needs to hold a large amount of BTC reserves to maintain the convertibility of the US dollar. This is a historic event that can greatly change the supply structure of BTC. If it really becomes a reality, it is not likely to happen in the short term. If there is continuous discussion and expectations continue, it will also be good for BTC.
4Alpha Research: I am most excited about the inclusion of Bitcoin in the national reserve. This is equivalent to further affirming Bitcoin's status as digital gold from a political perspective. Although Bitcoin is a consensus among our practitioners, from my observation, many outsiders still do not agree with this. If this policy can really be implemented, it can not only reduce the potential selling pressure from the US government on Bitcoin holdings, but also bring in a large amount of new funds. The affirmation of Bitcoin's status will also help to increase the outside world's attention and participation in the entire crypto industry.
As for whether Trump's promises can be fulfilled (if he is elected), we can observe the promises he made during his last term. In fact, Trump generally kept his promises in the areas within his presidential powers, such as building a border wall, raising tariffs, pursuing trade protectionist policies, and withdrawing from the TPP. Some of his other unfulfilled promises (such as economic reform and WTO reform) are indeed beyond his ability. Since the Republican Party lost the House of Representatives in the mid-term elections at the end of 2018 during his term, this has indeed objectively weakened his ability to fulfill his promises.
However, many of Trump's subjective policy decisions still appear to be erratic and vacillating, and appear to be not well thought out. Given Trump's performance in his last term, his verbal promises are still not very reliable, and the changes in market prices in response to his remarks can also reflect this in a sense. We will continue to pay attention to subsequent developments.
Crypto Market Observation: Don’t count too much on campaign promises. But as long as there are enough crypto investors, they can push legislation towards crypto-friendliness. What I’m most concerned about is the progress of crypto payments.
Lawyer Chen in Shanghai: Trump’s promise to include Bitcoin in the national reserves is quite exciting. It is equivalent to recognition of the value of Bitcoin and also marks the U.S. national endorsement of the encryption industry, but it is difficult to implement.
Chakra Research:
Jeffrey Ding: Of course, it will be included in the national reserves. Given the size of the United States, if it is equal to the status of gold and used as the "anchor" of the US dollar, it will be a qualitative leap for Bitcoin: Bitcoin is still regarded as a "risk asset" by the market so far, and its price fluctuates violently with changes in market risk preferences; if it is included in the reserves, I believe that the market style of Bitcoin will change dramatically.
4. Vitalik Buterin once called for people not to blindly support "cryptocurrency-friendly politicians". What do you think of this issue?
AiYing Compliance: "Don't be brainless" is always right, so there is nothing to comment on it. It is more like a correct nonsense. But I guess the deeper meaning he wants to express is that there needs to be a moderate balance between decentralization and centralization, and we should not blindly pursue the game of political power and forget our original intention of coming here to innovate political power.
Cycle Capital: Regardless of what the politicians say, the biggest impact on BTC is still monetary policy and the overall liquidity. Crypto-friendly politicians may help promote the entry of traditional funds into Crypto or establish a more complete institutional framework, but it does not necessarily happen. The opposite political system does not mean that all this will not happen in the end.
4Alpha Research: It is undeniable that Vitalik's concerns are justified, including that for politicians, "slogans" may only be a tool to win votes, and the actual policies implemented and the attitude towards encryption may change after the election. However, the development of Crypto is still in its very early stages. Crypto needs to increase not only the spontaneous promotion of the industry, but also the help of external forces. Crypto is a revolutionary force from 0 to 1, from nothing to something. During the revolution, any force that can be used must be won over. Therefore, from a rational point of view, Vitalik's remarks are correct, but it is also true that the development of the industry requires a policy-friendly environment.
Crypto Market Observation: This is normal. But as long as more and more voters support cryptocurrencies, it won’t be a big problem.
Lawyer Chen from Shanghai: I think his point of view is correct. The campaign proposals of American politicians are to serve their election, and there are many politicians who go back on their words after being elected.
Chakra Research:
Jeffrey Ding: The Chinese people value "harmony among the world", which is very appropriate here.
- We want crypto-liberalism, that's fine; politicians support crypto for their own reasons, that's fine too.
- Although the problems mentioned in Vitalik Buterin's article do exist, this is not a reason for American crypto voters to reject "friendly politicians". In order to seek broader development, it is time for liberal cryptocurrencies to "get along with the good" things in their eyes.
5. The fate of Bitcoin and cryptocurrencies is increasingly tied to politics. Is this a good thing or a bad thing?
AiYing Compliance: The relationship between the two can be described as "love and hate". On the one hand, the starting point of the crypto industry is decentralization and a revolution, but the body of capital is honest. They don't care what revolution you have. It's my purpose to make me get a hundred times the profit. So the game of political power will inevitably be involved. To maintain the law for them, political factors will naturally intervene deeply. But is this a bad thing for the crypto industry? In fact, it is not. It is more like a Trojan horse, gradually infiltrating and reforming the system and rules of the current financial system. Take cross-border payment as an example. It never starts from the level of ethics and politics. Take USDC and USDT as examples. They represent the US dollar and exercise the rights of the US dollar. On the other hand, they are also exercising the rights of decentralization. Countries such as Russia and Iran, which are sanctioned by the United States, are also using stablecoins as a means of cross-border payment to avoid detection and sanctions by the US Swift system. This is an interesting phenomenon produced by a typical half-political and half-decentralized representative. There are many such phenomena, and they are constantly evolving. Therefore, this problem is a state problem. It is changing every moment. Let's look forward to it together. The future will be more exciting.
Cycle Capital: Positive impact: The legitimacy and recognition of many cryptocurrencies that comply with the regulatory framework, including BTC, will be enhanced. The attention and involvement of policymakers in cryptocurrencies can promote their legitimacy and market recognition, thereby attracting more traditional investors and institutions to participate, and promoting market maturity and stability. However, it will also face stricter supervision and protection. Political intervention can bring about a stricter regulatory framework, reduce illegal activities in the market and investor risks, and enhance market transparency and predictability.
Negative impacts include that the fate of cryptocurrencies may be directly affected by political decisions and policy changes, and this uncertainty may cause the market to face huge volatility. Secondly, excessive political intervention may hinder the development of cryptocurrency technology and innovation, limiting its greater potential and scope of application in the global economy.
4Alpha Research: It is undeniable that these politically-related events and meme coins have injected a little vitality into the "fragmented" bull market to a certain extent. However, I am not optimistic about this situation. Looking back at history, we can see that past bull markets were mostly driven by innovation within the industry, such as the ICO boom a few years ago, the rise of public chains, DeFi Summer, and the outbreak of NFT.
But let's reflect on whether there have been any new narratives in the past six months or even a year? Inscriptions and BRC-20 may be an example, but that was a year ago. The runes a while ago seemed to be just old wine in a new bottle with a new name. As for the hyped DePIN and RWA, they have not caused a big response since their birth and have been in a downturn. Therefore, the recent market seems to be more dependent on the promotion of macro events, such as the approval of ETFs and the US election.
Recently, a new word "PolyFi" has emerged, linking political events with the crypto market. But it is undoubtedly a tragedy if an industry can only rely on external factors to promote development. I once wrote in an article: The current performance of the crypto market reflects a mentality of quick success and instant benefits. In the context of the lack of substantial technological innovation and application landing, the market can only rely on short-term hot spots to maintain its popularity. This phenomenon is worth our deep consideration. A healthy market requires stable innovation and long-term confidence, rather than repeated hype and short-term craze. I hope that all participants in the crypto field can calm down and get rid of impetuousness. I also firmly believe that we will usher in a more stable and prosperous market in the future.
Crypto market observation: It is good. When an industry grows big enough, it must deal with politics. In the past, the crypto industry developed too fast and had no foundation, so it was hammered everywhere. Now it has a certain foundation, and we look forward to the results of the industry's collective game.
Lawyer Chen in Shanghai: I think there are two sides to every coin. The increasingly close ties between the crypto industry and politics show that the industry is increasingly recognized by the world's mainstream. Although this is inconsistent with the decentralization that the industry advocates, development under supervision, licensed operations, and fulfillment of anti-money laundering obligations seem to have become the mainstream of industry compliance.
Chakra Research:
Jeffrey Ding: Good. Truly stepping onto the historical stage is the only way for a new force to succeed.
