Author: Matt Hougan, Chief Investment Officer of Bitwise; Compiled by 0xjs@Jinse Finance
As I write this memo on Monday afternoon, the cryptocurrency market is experiencing a sharp rise. Bitcoin has risen more than 5% in the past 24 hours, and Ethereum has risen more than 7%. Altcoins have followed suit.
This is the largest single-day increase in the cryptocurrency sector in the past two months. More interestingly, investors poured $555 million into Bitcoin ETFs on Monday, the largest single-day increase in four months.
Part of the reason for this rise is a plan announced by Democratic presidential candidate Kamala Harris on Monday, which, among other things, calls for the establishment of a smart regulatory framework for cryptocurrencies.
Reading the coverage of this proposal in the US media, you might think Harris has fully embraced cryptocurrencies.
Bloomberg wrote, "Kamala Harris emphasizes capital access and cryptocurrencies to attract black men."
But in reality, this statement doesn't say much. Here is the full text of her agenda:
Ensure that black men who hold digital assets benefit from financial innovation. More than 20% of African Americans in the US own or have owned cryptocurrency assets. Vice President Harris appreciates that new technologies can expand the channels for banking and financial services. She will ensure that owners and investors of digital assets benefit from the regulatory framework, thereby protecting black men and others participating in the market.
That's it. This created $50 billion in Bitcoin market capitalization.
I don't want to rain on anyone's parade, but that... doesn't amount to much! There is no mention of ensuring that cryptocurrency companies have fair access to banking services; no mention of changes in regulatory leadership; not even a mild comment about "embracing innovation in the digital asset space" or "the US leading in blockchain technology".
In fact, Harris's words sound more like a Rorschach test than a policy. If you are against cryptocurrencies, you will see Harris pushing for strict regulation of cryptocurrencies in the name of "protecting" investors; if you support cryptocurrencies, you will see Harris pushing for regulatory clarity and paving the way for the industry to move forward.
I'm not too close to the campaign team, so I can't say for sure what she meant. I've seen people claiming to have inside knowledge argue both sides. From my perspective, the only thing you can know is that the statement indicates that Harris recognizes that cryptocurrencies are very important to an important population group, and she will take the time to point that out.
This is good news. She knows cryptocurrencies exist, they are important, and they are not going away. But it is not the full-throated embrace that cryptocurrency advocates might have hoped for.
However, the fact is, this little bit of good news was enough to push Bitcoin up 5%. Enough to drive over $500 million into the Bitcoin ETF. Enough to make people start wondering if cryptocurrencies might ultimately hit new all-time highs.
To me, that's the most interesting thing right now.
Regardless of what Harris actually said, the price action of the past 15 days tells me that there is a lot of capital waiting on the sidelines to come into the market once things look normal.
In last week's memo, I talked about the conditions needed to drive cryptocurrencies to new highs and push Bitcoin above $80,000. On the election front, I mentioned that a Republican win or a divided government could work. My comments implied that we would have to wait until after the election to make another run at $80,000.
After today, I'm not so sure. Monday's bounce tells me that if cryptocurrencies start to take off, people don't want to be left behind. There is a lot of dry powder on the sidelines. As soon as we get a whiff of clarity, I think we'll see a rapid rise.
