Written by: SOLO CEESAY
Compiled by: Alvis, Mars Finance
The United States is balancing a weak dollar with an asset that has the potential to solve many of the financial problems facing the middle class.
Bitcoin first came to prominence more than three election cycles ago. However, the 2024 U.S. presidential election is the first time Bitcoin (and crypto more broadly) has come close to being seen as a key electoral issue. Fierce advocates of the ideals laid out in Satoshi’s white paper have become an influential subset of single-issue voters, remaining committed to the cause despite the effects of a bear market and broader industry turmoil in recent years, such as the collapse of once-lauded crypto exchange FTX. More recently, the tide has turned for the industry and its supporters, with Bitcoin prices holding steady and institutions like BlackRock, the world’s largest asset manager, claiming that Bitcoin is this generation’s store of value. As the race heats up, the question now is: what role will this modern form of money play in the future of the world’s most powerful economy?
The Federal Reserve has said that by 2024, the dollar will have only 3% of its original purchasing power, leading many developing economies to consider trading in currencies other than the dollar. There are also concerns that the current monetary policy designed to avoid a recession may actually lead to dollar hyperinflation and a recession. In recent years, the economy has vacillated between explosive growth catalyzed by loose monetary policy and economic collapse exacerbated by a looming debt crisis. The escalating geopolitical tensions and conflicts in the past few years have further exacerbated this volatility.
This chaos has led to a widening gap between the rich and the poor, with the wealth of the upper class increasing exponentially while the wealth of the middle class continues to decrease. Since its emergence, Bitcoin has been seen by many as a potential hedge for the middle class against economic fluctuations. It is expected to be an inflation-resistant asset that can bring economic independence to the declining middle class, but the US dollar remains the backbone of the global economy. Despite its declining purchasing power, the US dollar still retains the trust of many retail investors.
Today, the United States finds itself in an unprecedented dilemma: on one side is a depreciating dollar, and on the other side is an asset that has the potential to solve many of the outstanding financial problems facing the struggling middle class. How the latter is discussed and resolved will have the greatest impact on the development of the world's most important economy 25 years from now.
Against this backdrop, here are four bold predictions about how this year’s election will impact the future of Bitcoin and digital assets in the United States.
Gary Gensler may be out no matter who wins
Since taking over as SEC Chairman Gary Gensler has made few friends in the cryptocurrency community. While he’s had some notable victories, his approach to enforcement has also been met with defeat in the courts. Former President Donald Trump once promised that he would “fire” Gensler if he was elected, but that never actually happened. Traditionally, SEC chairs resign if there is a change in the White House during their term. If we see Vice President Kamala Harris win, it wouldn’t be surprising for her administration to take a similar stance to her opponent in an attempt to win favor with the industry. Change is in the air.
Harris’ Victory Could Benefit Bitcoin, While Trump’s Victory Could Benefit Ethereum
Bitcoin has largely acted as a commodity, flowing in when U.S. interest rates are lower and capital becomes cheaper. Given that a Harris administration is likely to continue current monetary policy and increase government spending, the cryptocurrency market should remain stable or even climb. Conversely, a Trump victory would mean incentives for cryptocurrency companies to be incubated in the U.S. — something the country has been lacking. Arguably, a clearer regulatory framework would emerge under a Trump administration, leading to more opportunities for the decentralized finance (DeFi) space. Given that the DeFi ecosystem is primarily built on Ethereum, a Trump administration could benefit it and other first-layer protocols.
Harris government may introduce cryptocurrency capital gains tax
While an electoral victory would allow Harris to set her own policy agenda, she served for three and a half years in an administration that once considered imposing a capital gains tax on cryptocurrencies. Given the amount of capital that will soon flow into the asset class, it is hard to imagine that the U.S. government will not try to get a piece of the action as cryptocurrencies become integrated into traditional finance. Given the strong desire to "pay attention" to cryptocurrency diehards expressed in the Trump administration's platform, it seems less likely that taxes will be increased under the Trump administration.
Trump to Release Official Plan on Bitcoin and Digital Assets Before Election
While Harris has been largely silent on digital assets on the campaign trail — only mentioning other emerging technologies in passing — Trump has been formally courting the “crypto vote.” The former president became the first and only president to attend the Bitcoin 2024 Nashville event this summer, where he famously said that Bitcoin’s future is in America and that he would “keep Elizabeth Warren and her mob away from your Bitcoin.” He also launched his own DeFi project, World Liberty Financial. If there is to be a formal policy proposal on cryptocurrencies and digital assets before the election, it will likely come from the Trump campaign.
Change almost always takes longer than expected and happens differently than planned. Bitcoin is no exception. The mission and message behind Bitcoin could be the most powerful liberating force signal in centuries. However, if the core principles of Bitcoin and cryptocurrencies are realized, the institutions that hold power stand to lose the most.
