Written by: Climber, Jinse Finance
The crypto market is increasingly affected by the U.S. election. From the accelerated approval of the Ethereum spot ETF to the recent divergence of crypto prices from U.S. stocks, it all shows that the direction of the new U.S. presidential candidate is increasingly becoming a weather vane for crypto investors.
Since Polymarket predicted that Harris's chances of being elected surpassed Trump's for the first time, the crypto market has been falling continuously. As of the time of writing, BTC has dropped from $62,000 to $56,000. The main reason behind this is that Harris has not yet made clear her personal attitude towards crypto since her nomination, and as the successor to the Biden camp, she is likely to continue the former's strict regulatory policies.
As political opponents, Trump and Harris often have different opinions. Under the pressure of the election, personal wishes will give way to votes. For example, Trump did not trust cryptocurrencies before, but now he supports Bitcoin in a high-profile manner. On the other hand, Harris is currently ahead of Trump in three key states, five swing states and even Polymarket in the United States, and she did not attend the "Crypto4Harris" event. Therefore, Harris may hold opinions against the policies that Trump wants to support.
The market fell and many people quit the circle amid the fog of the election
Affected by the rise in Trump's approval rating after his assassination on July 13, the crypto market ushered in a wave of increases, with BTC rising from about $57,500 to $68,500. In particular, Trump's speech at the Bitcoin Conference made BTC return to the $70,000 range.
Biden nominated Harris as the 2024 Democratic presidential candidate after dropping out of the race on July 22. The latter's poll ratings continued to rise and surpassed Trump at the end of July. In addition, the US government transferred $2 billion worth of BTC, leading analysts to speculate that the Biden administration will sell all Bitcoin before Trump takes office. At that time, coupled with the impact of Japan's interest rate hike, the crypto market plummeted, and BTC fell from $70,000 to $49,000.
On August 8, the Democratic Party of the United States launched the "Harris' Cryptocurrency" campaign, and the crypto market rebounded simultaneously, with BTC rising by more than 10% throughout the day. However, Harris was revealed to have not attended a crypto roundtable meeting later that day, and as Polymarket predicted that his chances of being elected would be equal to and even surpass Trump, the crypto market once again experienced a volatile decline.
BTC fell most significantly when market news broke that Harris was ahead of Trump in three key states and five swing states. Currently, there are media reports that Harris missed the "Crypto4Harris" online meeting organized by Democratic cryptocurrency supporters on August 15, and Harris' digital advertising spending exceeded Trump's by ten times.
On the other hand, the U.S. stock market has been rising continuously since August 8. Currently, the Dow Jones Industrial Average has exceeded 40,500 points and the Nasdaq is close to 17,600 points.
Regarding the above impact, brokerage firm Bernstein said in a research report that if Trump wins the US election, it will be good for the crypto market, while Harris's victory will be bad. At the same time, the report also pointed out that Bitcoin weakened after Polymarket odds and polls turned to support Harris.
Harris' unclear attitude towards encryption has also made investors worry about potential risks. Even on Trump's side, some institutions have stated that he may not actually take action.
Circle CEO Jeremy Allaire said that cryptocurrency is already a bipartisan issue, but more action is needed to solidify that status. He also expressed doubts about the likelihood that Trump will commit to the ideas.
The competition between Trump and Harris has also indirectly made the crypto market turbulent, with large contracts liquidated many times in the ups and downs of the market. On August 16, the total liquidation amount exceeded US$200 million, on August 9, the total liquidation amount exceeded US$200 million, and on August 5, the total liquidation amount exceeded US$1 billion...
The continuous decline in the market has also caused many blue-chip Altcoin to wipe out their gains in the past year. This has also caused many OGs to begin to doubt the correctness of entering the Web3 industry and have plans to withdraw.
Xiao Erduo, a well-known crypto KOL, said that he has developed a strong crisis of confidence in the crypto. He has now sold his principal and liquidated all currencies except Bitcoin.
Well-known trader Ansem also said that recent trading performance has been extremely poor and he is seriously considering quitting the circle permanently.
Harris's attitude is undecided, and political disputes pose investment risks
Looking back at the recent decline in the crypto market, the reason is closely related to Harris's increased chances of being elected and his unclear attitude towards the crypto market.
Earlier, there were reports that the Harris campaign was seeking to restart contact with Bitcoin and crypto teams, such as with crypto companies such as Coinbase and Circle. However, the team said that re-establishing contact with the crypto industry was not for donation purposes, but to pave the way for reasonable regulation.
As for Harris himself, he did not attend any conferences related to crypto-related topics, such as the Bitcoin Conference, the Crypto Roundtable, the "Crypto4Harris" online conference, etc.
In addition, Harris has not yet publicly committed to supporting the cryptocurrency industry, and is instead likely to continue the Biden administration's strict regulatory policy on cryptocurrencies.
Alex Thorn, head of research at Galaxy Research, once analyzed that Harris worked closely with key anti-cryptocurrency officials such as Brian Deese and Bharat Ramamurti. Deese once published an article on the White House website emphasizing the risks of cryptocurrency, while Ramamurti is considered the top cryptocurrency critic in the White House. Their involvement suggests that the Harris administration is unlikely to soften its stance on cryptocurrency policy and will continue to support strict regulatory measures to protect the security of consumers and the financial system.
Harris' running mate, Waltz, has explicitly advocated stricter regulation of cryptocurrencies, and recently even returned a $4,000 political donation from a former FTX executive.
The Federal Reserve’s enforcement action against Customers Bancorp on August 10 also caused the community to question Harris’ sincerity in trying to repair relations with the crypto industry.
There are signs that Harris is not in a hurry to show goodwill to the crypto market, and Harris was already ahead of Trump before making a statement on the crypto market. So unless necessary, Harris may not be in urgent need of funds and voter support from the crypto field.
In terms of fundraising funds, the Trump campaign announced that it raised $138.7 million in July, but Harris raised $200 million in the first week of her campaign. The Trump team pointed out that as of August, their cash reserves were $327 million, which put them under certain financial pressure considering that there are only three months left before the election.
On the other hand, as political enemies, Trump and Harris often attack each other and have diametrically opposed political views. For example, on August 10, Harris said that the Fed's actions should be independent of the president. But Trump previously said that if elected, he would seek to influence the US monetary policy.
This means that in terms of attitude towards cryptocurrencies, Harris is likely to go against Trump and continue to strengthen regulation of the crypto market. This is exactly the potential risk that many institutions and ordinary investors are worried about.
At this stage, the fight between Trump and Harris has indeed increased the uncertainty in the crypto market. But the good news is that there are more and more topics and news about "Harris' crypto-friendliness", especially since both of them have some crypto-friendly rumors or actions.
Harris:
On August 15, Circle CEO stated that the Harris campaign is actively engaging with the crypto industry and mentioned that Harris campaign representatives participated in previous crypto roundtable meetings.
On August 8, the US Democratic Party launched the "Crypto for Harris" campaign. The campaign aims to attract 40 million American voters who own digital assets and demonstrate the Democratic Party's position on promoting the blockchain and cryptocurrency industry.
On August 1, Harris' team was revealed to have contacted people from crypto companies such as Coinbase, Circle, and Ripple Labs to ease tensions between the Democratic Party and the crypto industry.
There are also reports that Harris' husband is also a "cryptocurrency enthusiast."
Trump's side:
Trump has criticized cryptocurrencies many times during his presidency, saying they are "not money," based on "castles in the air," and "may promote illegal behavior," and that Bitcoin is a "scam." But during this year's U.S. presidential campaign, his attitude changed 180 degrees.
Trump's representative declarations and promises on the crypto market include: if re-elected, he will replace Gary Gensler, chairman of the Securities and Exchange Commission (SEC), who is critical of cryptocurrencies; if elected, the government will retain 100% of its Bitcoin and keep the United States at the forefront of the cryptocurrency field.
The Trump official store accepts Bitcoin payments for items including shoes and perfume.
In addition, Trump's eldest son Donald Trump Jr. once said that Bitcoin is a means to hedge against inflation and authoritarian governments. He recently announced the opening of the Telegram channel "The DeFiant Ones" and that he will also launch a crypto project.
Trump's second son Eric Trump said that he will soon launch a crypto project related to "digital real estate", and he once wrote that he really fell in love with cryptocurrency/DeFi.
Conclusion
At this stage, the competition for the US presidency is becoming increasingly fierce, and the upcoming debate between Trump and Harris has made the prospects of the crypto market even more unclear. In particular, Harris has never expressed his position on the crypto market, which has led many investors to choose to wait and see. Once the regulation of crypto becomes stricter, the risks will obviously outweigh the opportunities for the crypto market, which is already volatile.
