US Senator Cynthia Lummis, the first US senator to own crypto, is now proposing that the United States should create a national Bitcoin reserve to secure the country’s financial future and leadership in global finance. In its boldness and potential to help the United States lead in the “next financial frontier, she likens it to the Louisiana Purchase.
Lummis has been staunchly in the pro-crypto camp from the early days. However, now she has several more Washington bigwigs on her side. Chief among them is Republican candidate and former US President Donald Trump. Even Democrats, who were tough on crypto during Biden’s administration, seem to be softening their stance.
Crypto Tracker
The crypto industry has already donated a record $119 million to political campaigns this cycle. This contribution — mainly through a Coinbase backed super PAC called Fairshake— amounts to nearly half of all the political contributions made in the current cycle. These contributions are not limited to any one political party. The industry is strategically backing candidates across party lines who align with their vision for a more innovation-friendly regulatory environment. This approach reflects the broader importance of crypto as an economic force and a potential driver of technological growth. It also highlights the industry’s desire to shift the conversation away from its reputation for regulatory non-compliance and instead focus on its role in shaping the future of finance.
Trump Bump or Harris Slump?
One of the most significant elements of the 2024 election is the divergent views of the leading candidates on crypto– Former President Donald Trump has become one of the most vocal advocates for digital assets. His campaign has made bold promises to transform the U.S. into the “crypto capital of the world.” Trump is backing Lummis on her proposal to create a Bitcoin reserve for the US. If Trump wins, analysts predict a bump up in Bitcoin prices. Optimists predict that Bitcoin price will touch six figures if Trump comes to power.
Vice President Kamala Harris has adopted a more cautious approach. While she hasn’t publicly taken a strong stance on crypto, her administration has shown an openness to engaging with industry leaders. Harris’s team has indicated support for policies that foster emerging technologies, including blockchain, but without committing to the sweeping reforms that Trump has proposed. This more measured approach leaves room for regulatory oversight, which could be seen as either an opportunity for responsible growth or a threat to innovation, depending on which side of the crypto debate you stand. Crypto analysts view a Harris win as a neutral to negative event for the industry. On Polymarket, a platform where people can bet on the outcome of real-world events like elections, the odds are in favor of a Trump victory.
Market Reactions and Economic Context
Historically, the US elections have had a significant influence on financial markets, and the crypto sector is no exception. Market reactions are often swift and volatile in response to perceived election outcomes, and the 2024 race is already showing signs of this trend. If Trump’s pro-crypto rhetoric continues to resonate with voters, it could spark bullish sentiment, with investors anticipating a more favorable regulatory environment for digital assets. On the other hand, a Harris administration that leans toward increased regulation could trigger bearish trends as the market adjusts to the possibility of stricter oversight.
Leading up to November, the crypto market is likely to experience increased volatility as investors react to polling data, campaign developments, and debates. Investors may adopt risk-averse strategies, opting to minimize exposure to crypto until there is greater clarity on the regulatory future. This uncertainty could lead to price fluctuations in major crypto tokens like Bitcoin and Ethereum, with the market swinging in response to each candidate’s perceived chances of winning.
The broader economic context also plays a crucial role in shaping how the election will impact the crypto market. Factors such as inflation, interest rate, and overall economic health influence investor behavior toward risky assets like crypto.
Come November, regardless of who wins the election, crypto’s momentum is undeniable. The industry’s growing influence and adoption suggest a strong long term future ahead, no matter the political outcome. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of the Economic Times)
(The author Balaji Srihari is Business Head, CoinSwitch. Views are own)
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
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