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Bitcoin Soars as Crypto Industry Gains Political Ground Ahead of 2024 Elections

Emilia Wright | October 30, 2024

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Bitcoin Nears Highs: The Crypto Industry Emerges as Election’s Big Winner

As the political landscape heats up ahead of the 2024 elections, the cryptocurrency sector has already positioned itself as a significant victor—regardless of whether Donald Trump or Kamala Harris secures the White House. After the tumultuous 2022 crypto crash, Bitcoin has made a remarkable comeback, recently approaching its all-time high by hitting $73,500—an increase of over 63% this year. The landscape is notably different from before, with once-infamous exchanges like FTX now fading into obscurity and a stronger presence of industry lobbying and campaign contributions shaping the narrative in Washington.

Crypto’s Pivot in Political Influence

This election cycle has witnessed a dramatic surge in political engagement from the crypto community, spearheaded by over $130 million in spending aimed at supporting pro-crypto lawmakers in Congress and the White House. Consequently, next year’s Congressional makeup is expected to be one of the most crypto-friendly ever. Both Trump and Harris are showing an openness to fostering legislative advancements for the industry, prompting a sense of optimism among crypto firms.

Faryar Shirzad, the chief policy officer at Coinbase Global, epitomizes the industry’s buoyant sentiment: “Any outcome that occurs on Tuesday I will still feel very good about where we are,” he stated. This positive outlook is further bolstered by the belief of some analysts that the upcoming election could significantly influence regulatory decisions concerning Bitcoin and other cryptocurrencies.

Election Outcomes and Regulatory Implications

One of the focal points of speculation among analysts is the potential regulatory landscape post-election. Hal Goetsch of B. Riley Securities highlights the election as a critical moment for crypto regulation, asserting that a Trump victory would likely usher in more favorable policies for the crypto sector. On the other hand, Bernstein Research cautions that a Harris presidency could lead to stricter regulatory conditions, particularly due to her slower approach to easing restrictions.

This need for a clear regulatory framework is underscored by the ongoing scrutiny from the Securities and Exchange Commission (SEC). While the SEC has recently approved spot-based Bitcoin exchange-traded funds, it has pursued aggressive actions against industry players like Coinbase, Kraken, and Binance, alleging they operate as unregistered securities exchanges. The bitter legal battles and regulatory hurdles have led to a climate of uncertainty, compelling crypto companies to advocate for more transparent oversight.

Potential Changes at the SEC

Should Trump emerge victorious, changes in SEC leadership are almost guaranteed. Historically, when a new administration takes the reins, the sitting SEC chair often steps down. Trump’s previous remarks at major crypto events suggest he is aligned with the industry’s goals. Conversely, Harris’s approach remains less predictable. There are calls from influential figures in the crypto community urging her to consider replacing SEC Chair Gary Gensler, yet the political complexities she would face make this uncertain.

The Lobbying Landscape: Unprecedented Funding

This election cycle, political action committees (PACs) funded by crypto companies such as Coinbase and Ripple Labs have spent over $134 million to bolster candidates who support crypto initiatives. The result is a noteworthy shift in how candidates position themselves in relation to the crypto industry, striving to prove their pro-crypto credentials.

Early victories for the crypto agenda are already evident. Industry-backed PACs invested $10 million to support Rep. Adam Schiff in the California Democratic Senate primary, bolstering expectations that he would emerge victorious in one of the nation’s most secure Democratic territories.

Legislative Hurdles Ahead

Key legislative agendas are riding on the outcome of the elections. Minted to regulate stablecoins and establish clearer guidelines for cryptocurrency exchanges, these legislative efforts could pivot either way depending on the election’s results. Under Trump, the prospects appear favorable, particularly with bipartisan support for some crypto-related legislation already identified.

Even if Harris wins, there’s still optimism around potential legislative movements during the “lame duck” session, although comprehensive outcomes may prove challenging given the expected political shifts and competing priorities.

Market Dynamics Post-Election

While local regulations and legislation are influential factors, macroeconomic trends, including interest rates set by the Federal Reserve, will also influence Bitcoin’s price in the medium term. Market reactions in the aftermath of the election could potentially provide a short-term boost to Bitcoin if Trump wins. In contrast, the stock of Coinbase, which derives a significant portion of its revenue from scrutiny-sensitive areas, may stabilize until regulatory clarity emerges.

Amidst the uncertainty, analysts urge caution, suggesting careful observation of how the election unfolds will dictate future market movements. “We expect COIN shares to remain range-bound until the election is decided,” remarked Goetsch, indicating the sentiment surrounding potential operational landscape changes.

Conclusion

The evolving narrative surrounding crypto in relation to the 2024 elections highlights the industry’s growing political clout. Whether it’s navigating regulatory risks or capitalizing on newly drawn lines of partisan support, the outcome will undoubtedly set the stage for the future direction of cryptocurrencies like Bitcoin—not just as a financial asset but as a pivotal force in shaping policy and innovation in the United States.