Trump's assassination and Biden's withdrawal from the election, these two events related to the US presidential election are becoming catalysts for the rebound of the crypto asset market. Bitcoin once broke out of its downturn and broke through $67,000, with an increase of more than 10% in a week. Meme coins about the two people are also emerging in an endless stream.
Donald Trump, the candidate who calls himself the "crypto president", received campaign funds in the form of crypto assets, and gained support from his own assassination and his opponent's withdrawal from the election. His campaigning has now become a "barometer" of the crypto asset market. Trump also struck while the iron was hot and worked hard to win votes from the crypto community.
According to the Wall Street Journal, Trump will deliver a speech at the 2024 Bitcoin Conference at the end of July and will hold a fundraiser before that. Teong Hng, CEO of Satori Research, predicts that Bitcoin may soon return to its historical highs, "there will be a strong rebound at the end of the year, and Trump's election will be its symbol."
However, Ethereum co-founder Vitalik Buterin sang a different tune at this time. On July 18, he wrote an article opposing making political voting choices based on "whether to support encryption", because the candidates are friendly to cryptocurrencies now does not mean that they will still do so in five years.
How long can the “Trump deal” for crypto assets last?
Trump doubles down on "crypto-friendly" stance
On July 21, Biden announced in an "open letter" that he would no longer seek re-election and withdraw from the presidential election. Soon, the voices supporting Trump were unprecedentedly high, and coupled with the high-profile image brought by the previous assassination incident, Trump's chances of winning the election increased greatly. Data from the decentralized prediction platform Polymarket shows that Republican candidate Trump's support rate for winning the 2024 election is as high as 61%, far exceeding Kamala Harris (37%) who has the second highest support rate.
Investors on Wall Street believe that Trump is likely to be reelected as president. Industries that may benefit from Trump's policies after his election, such as cryptocurrency, fossil energy and banking, have seen a market called "Trump trading".
The most noisy among these is the crypto asset industry. Not only is the recent trend of Bitcoin showing a correlation with Trump's campaign, but Trump's moves have also attracted opinion leaders related to crypto assets to participate in public statements, bringing about market linkage.
First, Bitcoin (BTC) surged after Trump's assassination, with a weekly increase of 10%, sweeping away the previous market gloom; then, Tesla CEO Elon Mask, who once "shill" for Dogecoin, followed the crypto community and changed to the "Laser Eye" headset, which is a consensus in the crypto circle. Marc Andreessen, founder of the famous crypto asset venture capital institution a16z, and Ryan Selkis, founder of Messari, and other celebrities in the circle also changed their avatars to express their support for Trump's crypto-friendly attitude; then,
DMAGA, a token related to the "Laser Eyes" Meme culture, rose more than 50 times in a few hours, and its market value has exceeded 60 million US dollars.
Cryptocurrency KOLs change their profile pictures to laser eyes
How deep is Trump's relationship with crypto assets?
A Wall Street Journal report citing the latest data from the Federal Election Commission (FEC) shows that of the approximately $331 million raised by the Trump campaign last quarter, approximately $3 million was in cryptocurrencies, including BTC, ETH, and Dogecoin.
Recently, Trump has once again sent signals to show his crypto-friendly stance. According to overseas media reports, he will deliver a speech at the 2024 Bitcoin Conference at the end of July and hold a fundraising event before that.
In addition, in an interview with Bloomberg, Trump also plans to release a fourth NFT series because the previous NFT series was "very successful" and sold out in one day. "I plan to release a new series because this is what many people are looking forward to."
Trump, who calls himself the "crypto president," has been deeply "bound" to the crypto asset market. Teong Hng, CEO of Satori Research, pointed out that active trading in the over-the-counter options market indicates that Bitcoin may soon return to its all-time highs, predicting that "there will be a strong rebound at the end of the year, marked by Trump's victory."
FRNT Financial CEO Stephane Ouellette also expressed a similar view, saying that the increasing likelihood of Republican candidate Trump being elected president has pushed Bitcoin and other cryptocurrency markets higher. This is because if the Trump administration is re-elected, it will create a more favorable regulatory environment for the cryptocurrency industry.
Ethereum co-founder Vitalik sings a different tune
Now, whether Trump's election can bring another upward trend in the crypto market has become the focus of the crypto community. However, there is a "counter-tone" amid the enthusiastic support.
On July 18, Vitalik Buterin, co-founder of the Ethereum network, wrote that he opposed making political voting choices based on whether or not to support cryptocurrencies, because just because a candidate is cryptocurrency-friendly now doesn’t mean it will still be the case five years later.
Vitalik opposes voting on whether to support cryptocurrency as a political choice
Vitalik wrote pointedly in the article, “If you find a politician who is friendly to cryptocurrency, one thing you can do is to check what they thought of cryptocurrency itself five years ago.”
This is simply "implying" Trump five years ago, when he was the President of the United States but held a negative view on crypto assets.
In 2019, Trump tweeted, "I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on air. Unregulated crypto assets can facilitate illegal conduct, including the drug trade and other illegal activity."
In 2021, Trump again said in an interview with Fox Business Channel that Bitcoin is a scam against the US dollar and he would not be surprised if it fell below $6,000.
As a result, five years later, Trump slapped himself in the face, posing a crypto-friendly stance and criticizing the Biden administration's tough stance on crypto assets.
Adam Cochran, partner of Cinneamhain Ventures, also believes that Trump's promises to win votes are very unreliable. He pointed out that "Trump has a decades-long history of selling out" and "selling out others for his own benefit." An analysis from the fact-checking website PolitiFact said that Trump has broken more than half of the 102 promises he made during the 2016 presidential campaign.
Some people believe that even if Trump is re-elected and fulfills his promise, the crypto asset market has become increasingly related to the U.S. stock market, which means that the Fed's interest rate policy will affect the market. So, how much impact will Trump's election as the U.S. president have on the Fed's decision-making?
In July this year, on the eve of the first debate of the general election, Trump stated in an interview with the media that he would not let Powell serve as the chairman of the Federal Reserve for the third time, but would let him complete his second term. At the same time, he said that the Federal Reserve should avoid cutting interest rates before the November election to avoid boosting the economy during Biden's term.
The Republican Party represented by Trump is more inclined to loose financial policies. During his tenure, Trump has repeatedly criticized the Federal Reserve and demanded that Fed Chairman Powell stop raising interest rates and immediately cut interest rates. Recently, during the campaign, Trump also revealed his economic policies, emphasizing that Trump economics = low interest rates + low tax rates.
In fact, the Federal Reserve is an independent entity in the US government system, and its independence emphasizes that it is not influenced by politics. The US president has no power to appoint or dismiss the chairman of the Federal Reserve. In addition, government policies largely depend on Congress.
According to Wolfe Research, the biggest policy changes over the past 15 years have all occurred when the House, Senate and the White House were controlled by the same party. Without Republican control of both chambers, Democrats can put up roadblocks to Trump's agenda.
How long will Trump's "binding" to cryptocurrency last? In the short term, before the results of the US election are released in November, Trump's position, behavior and voter support will still have an impact on the crypto asset market, and after the election, the "Trump deal" is likely to weaken.
