What Does The 2024 US Presidential Election Mean For Cryptocurrency Markets?

With this year’s resurgent crypto markets, cryptocurrency is set to become a bigger election topic than ever. Some studies estimate that 15.6% of Americans own some cryptocurrency. 

That’s over 50 million potential voters. Some analysts even think that crypto-owning voters may swing the election.

What does that mean for cryptocurrency prices? And how can we profit?

Background: The “War On Crypto”

Ever since the early days of Bitcoin, cryptocurrency has had plenty of enemies. Many of the most outspoken critics of Bitcoin and other cryptocurrencies have been members of the US’s democratic party. 

Most prominent among these is Elizabeth Warren, who cited concerns about Iran and North Korea using cryptocurrency and called for stronger regulation. Biden has vetoed legislation that would allow banks and other companies in the financial sector to hold Bitcoin and other crypto currencies. 

The Biden administration has gone as far as publishing a report attacking Bitcoin’s Proof of Work consensus algorithm and arguing in favor of a central bank digital currency (CBDC). The Department of Justice, under Biden, also arrested the founders of Samourai wallet, a popular Bitcoin mixing service. 

All of this has led to a situation where Biden, and the Democratic party in general, are viewed as anti-crypto. As a result, when Biden had a bad performance in his first debate with Trump, Bitcoin price jumped by over 1% during the course of the 90 minute debate. 

Trump Goes After The “Crypto-Vote”

Trump saw a big opportunity in the Democratic aversion to crypto. Although he previously called cryptocurrencies a scam, he has now made a major reversal.

The Republican real estate mogul became the first presidential candidate to accept campaign donations in Bitcoin, along with Ethereum, Solana, Dogecoin and… Shiba Inu. Yes, Shiba Inu coin.  

Trump has made a number of bold claims, including that he will “end Biden’s war on crypto” and make sure that all of the remaining Bitcoin are mined in America. This sentiment echoes many industry leaders, who argue that excessive regulation will just push innovation overseas and ultimately harm America. 

Trump has promised to build a “crypto army” to lead his campaign to victory. 

Will Democrats Strike Back?

Trump’s move has some democrats on edge. A growing movement within the Democratic party is calling to embrace cryptocurrency as well. Chuck Schumer and 10 other democratic senators passed a bill rolling back some onerous crypto regulations. Biden vetoed the bill. 

However, the cryptocurrency lobby is also becoming stronger and exerting influence on democrats. Some reports say that cryptocurrency firms have pooled $160 million dollars for campaign contributions. 

In the democratic primaries, Jamaal Bowman, an outspoken anti-crypto candidate for congress, lost to pro-crypto George Latimer. It is believed that Latimer’s campaign received financing from crypto industry players. Democrats may be forced to take a more crypto-friendly stance to secure campaign contributions and votes. 

Short-Term Effects: Trading The news?

As election season goes on, there will no doubt be opportunities to “trade the news.” This could take the form of temporary price boosts when Biden suffers setbacks, or when pro-crypto democratic candidates get the upper hand. 

Trading the news is a strategy used mostly by day traders, so it’s not for everyone. To do it effectively requires very high speed buying and selling. Many experienced traders advise against it completely. 

Long-term Impact On Crypto Markets

At first, it appears that this is all very bullish for cryptocurrency. If Trump wins, it could be a big boost to cryptocurrency use in the US. Even if he doesn’t, democrats may be forced to become more crypto-friendly. 

However, there are a couple of caveats. First of all, US presidential candidates are notorious for not honoring campaign promises. Just because a politician says they will support cryptocurrency doesn’t mean they’ll actually do it. 

Second, crypto markets are global. While the US is an important part of the markets, its influence is limited. As some US politicians and industry leaders have pointed out, if development does not happen in the US, it will just happen in other countries. 

Overall, the outcome of the election is unlikely to have major long-term effects on cryptocurrency markets as a whole. The growing crypto lobby, along with a growing number of cryptocurrency owners will continue to have an effect on legislation regardless of who wins the election. Any effects the election does have will be offset sooner or later by development of the market in other countries.

Effects On The US market

While the election may not have a major long-term impact on cryptocurrency as a whole, it could have a major impact on companies and projects based in the US. Pro-crypto voices argue that regulation will push innovation and crypto-related jobs overseas. This criticism is absolutely valid. 

Crypto-skeptics are more concerned with issues like financial stability and preventing money laundering. If these concerns win out, it could cause the US and US-based companies to lose out on market share, while boosting economies in places like Asia, the Middle East, the Mediterranean and the Caribbean. 

This could have implications for stocks like Coinbase (COIN) that deal directly in cryptocurrency, as well as stocks like Microstrategy (MSTR) which hold Bitcoin as part of their capital reserves strategy. Much of Microstrategy’s price growth over the last two years has been due to their unconventional approach, so restrictive regulations could have a negative effect on share price. 

Some crypto projects are based in the US for the most part; for example Ripple (XRP), Algorand (ALGO), Paxos, Tether (USDT) and a number of others have their headquarters and most or all of their staff inside the US. Prices of these tokens could suffer in a restrictive regulatory environment. 

The biggest impact is likely to be on future projects rather than existing ones, however. This is more about opportunities than risks— a more open regulatory climate will allow established players in the financial sector to expand into cryptocurrency markets and boost their business. If a more open approach does finally win out, it will be worth keeping an eye out for the first projects and companies to take advantage of it. 

This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy.