Author: Crypto, Distilled
Compiled by: TechFlow
Introduction:
Public information shows that Trump plans to give a speech at the 2024 Bitcoin conference.
Unlike crypto tokens that created their own MEMEs to take advantage of the US election, this time it was Trump who took the initiative to establish contact with the crypto conference. Political-related tokens may see ups and downs again.
However, apart from individual figures, the US election, as a political phenomenon, can indeed bring new variables to the crypto market. What effect can it produce?
The following is an analysis from @DistilledCrypto, a well-known external analyst, compiled by Shenchao.
text:
2024 could be the most important election year in the history of cryptocurrency. The policies of the new leaders will profoundly affect the cryptocurrency market for years to come. Here’s everything you need to know about the upcoming US election.
Why is this year special?
One big reason is scale. 2024 is one of the largest global election years in history, with more than 60 countries (49% of the world's population) taking part. (Courtesy of @TheEconomist)
$BTC’s Global Impact:
Traditional stock investors often only focus on elections in one country, but digital assets like $BTC are global, so all elections matter.
Motivations for embracing cryptocurrency:
Mainstream opinion of $BTC has changed dramatically in recent years, largely due to the growing monetary and political influence of cryptocurrencies. Countries may reward politicians who support cryptocurrencies and punish those who oppose them.
A perfect example:
In regions where $BTC is understood, pro-crypto candidates have been victorious, such as in Latin America. For example, pro-Bitcoin candidates dominated in El Salvador and Argentina. (Courtesy of @Coinmarketcap)
Turning to Cryptocurrency:
Just as BlackRock did a 180 on $BTC, governments, many of which are now embracing cryptocurrencies to gain support from the cash-rich industry, may follow suit.
Donald Trump's U-turn: From "scam" to forming a "crypto army"
The rise of the $BTC ETF:
A key moment was the approval of the $BTC spot ETF. Nearly a third of US voters said this made them more interested in $BTC and cryptocurrencies.
The survey was conducted by Harris Poll on behalf of Grayscale between April 30 and May 2, 2024, among 1,768 U.S. adults (ages 18 and older) who plan to vote in the 2024 presidential election. Data was weighted to ensure representativeness based on factors such as age, gender, race, religion, education, marital status, household size, income, employment, and online propensity. (Courtesy of @grayscale)
Passive retail funds?
We may see more capital inflows into $BTC during the next election cycle. 47% of US voters expect a portion of their portfolio to include cryptocurrencies.
The survey was conducted by Harris Poll on behalf of Grayscale between April 30 and May 2, 2024, among 1,768 U.S. adults (ages 18 and older) who plan to vote in the 2024 presidential election. Data was weighted to ensure representativeness based on factors such as age, gender, race, religion, education, marital status, household size, income, employment, and online propensity. (Courtesy of @grayscale)
Bullish election trend:
Aside from potential regulatory impacts, elections tend to drive asset prices. In past election years, the S&P 500 has performed more positively than negatively.
When Republicans are elected, the average return is 15.3%
When Democrats are elected, the average return is 7.6%
The average return across all election years is 11.28%
(Thanks to @morganstanley)
S&P 500 Total Returns in Presidential Election Years (1928-2016)
S&P 500 Election History
There have been 23 elections since the S&P 500 was launched. In those election years:
19 of 23 election years (83%) had positive returns
When a Democrat is in office and the newly elected Democrat is also in office, the average total return for that year is 11.0%
When Democrats were in office and Republicans were elected, the average total return for the year was 12.9%
(Thanks to @morganstanley)
Why do elections drive asset prices higher?
Elections often spur dynamic changes and growth in the market, which is often achieved by increasing the money supply.
Bitcoin ($BTC) has historically tended to outperform during periods of monetary inflation. (Courtesy of @beincrypto)
$BTC is currently higher than in previous election periods:
$BTC’s current price is higher than any previous election period (we also saw new all-time highs before the halving).
Some worry this could lead to an early peak (left-shift cycle), while others believe we are witnessing the birth of a super cycle. (Courtesy of @grayscale)
The cryptocurrency battlefield in the United States:
Republicans are generally positive about cryptocurrencies, but what about Democrats?
The Biden administration and the SEC have traditionally been hostile to cryptocurrencies.
However, there have been signs of change recently through multiple cryptocurrency ETFs.
Democratic Party shift:
Recently, multiple Democratic members of Congress and the Senate voted to repeal SAB Order 121, which had previously placed significant restrictions on financial institutions’ exposure to Bitcoin ($BTC).
SAB 121 marks a significant change to the long-standing accounting treatment for custodial assets and threatens the industry’s ability to provide safe and secure custody of digital assets for customers. Other non-bank digital asset platforms subject to SAB 121 are not required to meet the same capital, liquidity, or other prudential standards as banks and therefore do not face the economic pressures created by SAB 121. Limiting banks’ ability to provide these services leaves customers with few well-regulated and trusted options for safeguarding their digital asset portfolios and ultimately exposes them to greater risk. (Courtesy of the U.S. Government)
Bitcoin Accounting Rules:
Another major development is the long-awaited release of accounting standards for Bitcoin.
FASB's (Financial Accounting Standards Board) Bitcoin fair value rules will take effect in 2025, which may prompt more companies to use Bitcoin as a strategic reserve asset.
Final Thoughts:
The United States faces choices on many fronts.
However, unlike in previous elections, Bitcoin is now a key factor in politicians’ considerations.
With an election approaching, the influence of cryptocurrency has never been greater.
