November 5, 2024

Bitcoin’s Path to Historic Highs: The Crypto Industry’s Political Momentum Ahead of the 2024 Election

Bitcoin Nears Historic Highs: A Bright Future for Crypto Amid Election Uncertainty

As we approach the 2024 election, one thing is crystal clear: the cryptocurrency industry is already emerging as a formidable victor, regardless of whether Donald Trump or Kamala Harris claims the presidency. With Bitcoin nearing its all-time high of $73,500 and a staggering 63% increase this year, the so-called “crypto crash” of 2022 has quickly fallen into obscurity. Shady exchanges like FTX have been relegated to the past, and the crypto sector is now experiencing an unprecedented surge in political clout in Washington, underpinned by a $130 million blitz of campaign contributions this election cycle.

Pro-Crypto Congress on the Horizon

The incoming Congress is poised to become one of the most pro-crypto lawmakers in history. Both Trump and Harris have signaled their willingness to support the industry’s long-sought regulatory goals. Faryar Shirzad, Chief Policy Officer at Coinbase Global, stated, “Any outcome that occurs on Tuesday, I will still feel very good about where we are,” underscoring the optimism prevailing among crypto executives. Analysts are also weighing the potential impacts of the election on the cryptocurrency landscape, with B. Riley Securities’ Hal Goetsch asserting that the political climate may very well act as a catalyst for Bitcoin and crypto firms. He expressed confidence that a Trump victory could enhance support for the industry, while a Harris administration might not be as favorable.

The Regulatory Stakes

The importance of the upcoming election cannot be overstated, particularly in light of ongoing legal battles with the Securities and Exchange Commission (SEC). Under Chair Gary Gensler, the SEC has taken a tough stance towards the crypto industry, pursuing lawsuits against major firms such as Coinbase, Kraken, and Binance. These companies maintain they are operating within legal bounds, but the heavy regulatory scrutiny threatens to stifle innovation and growth. Should Trump win, Gensler’s departure is virtually assured; he would likely step down following a traditional precedent when party control shifts in the White House.

Conversely, Harris’s position on Gensler remains murky. Major Democratic figures with crypto industry ties are advocating for his replacement, but as President, Harris would likely be preoccupied with confirmations and would face the challenge of balancing various political interests.

Trump’s Favorable Stance on Crypto

While the Harris-Biden administration has been criticized for stifling innovation through increased regulation and taxes, Trump has seized the narrative, endorsing the idea of making America the “crypto capital of the world.” He even attended a major Bitcoin conference earlier this year, voicing his enthusiasm for bringing the U.S. to the forefront of this burgeoning market. His personal venture into crypto—launching World Liberty Financial, a stablecoin project—has drawn attention, inviting questions about potential conflicts of interest during his campaign.

The Bipartisan Push for Crypto Legislation

The heavy lobbying by the crypto sector cannot be overlooked. Political action committees associated with Coinbase, Ripple Labs, and Andreessen Horowitz have collectively invested over $134 million backing pro-crypto candidates. Democratic Congressman Adam Schiff from California, who enjoys strong industry support, is almost guaranteed to secure a seat in the upcoming general election. The crypto industry is currently advocating for two key pieces of legislation that would set standards for stablecoins and shift much of cryptocurrency regulation from the SEC to the Commodity Futures Trading Commission—a less strenuous regulatory body.

The outlook for crypto legislation appears markedly brighter under a Trump presidency. A Republican-authored bill, buoyed by support from several Democrats, passed the House earlier this year. However, regardless of who wins the presidency, chances are promising that crypto legislation could advance during the post-election “lame duck” session.

Market Dynamics and Future Considerations

While regulatory clarity remains a critical component for the industry’s future, the impact of macroeconomic factors and Federal Reserve policies cannot be overlooked. Anticipations regarding interest rate policies will significantly affect Bitcoin and mining operations. Should Trump emerge victorious, Bitcoin could enjoy a post-election surge, although current models depict a tightly contested race.

For Coinbase, the response to the election outcome will likely dictate stock price movements, especially as nearly half of its revenue is derived from areas that have been scrutinized by the SEC. If a more favorable regulatory environment arises post-election, it could deliver a much-needed boost for cryptocurrencies and related stocks.

In summary, the impending election is not only a battle for the presidency but also a pivotal moment for the future of cryptocurrencies in America. The stakes are high, and the direction we head in will depend significantly on who takes the White House and how they choose to engage with this rapidly evolving landscape.

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