Cryptocurrency manipulated by American political parties: Consensus or political game?

Author: LBank

With the approval of the BTC ETF earlier this year and the upcoming U.S. elections, the relationship between cryptocurrency and the volatility of U.S. politics is becoming increasingly intertwined. Recently, with a series of actions by Trump, cryptocurrency, although an emerging and controversial field, is now becoming an important bargaining chip for gaining votes and financial support in U.S. political elections.

Today, LBank will review the attitudes of U.S. politicians towards cryptocurrency and further predict the future trends of the crypto market.

Crazy Candidates, Crypto and Votes

2024 is a pivotal "Ken" moment for the U.S. elections.

He does not want to miss the new power brought by cryptocurrency, but at the same time, he lets the SEC act as a double-edged sword, maintaining a serious distance through various economic sanctions. Compared to Singapore's early adoption, the U.S. political scene and cryptocurrency seem more like a flirtation phase—neither officially announced nor hidden, but deeply immersed in this seemingly ambiguous and undefined tug-of-war.

First is the extremely crazy and peak opinion leader Trump, who quickly opened the floodgates of the crypto market through his statements and meme effects.

• On May 22, he opened a cryptocurrency donation website, officially accepting cryptocurrency donations;
• On May 26, he publicly stated, "I will ensure that the future of cryptocurrency and Bitcoin is made in the USA… I will support the self-custody rights of 50 million cryptocurrency holders across the U.S." and promised to pardon the Silk Road founder if elected, strongly supporting cryptocurrency and protesting Biden's crackdown on the industry.
• On May 30, according to The Wall Street Journal, Donald Trump is considering appointing Elon Musk as a policy advisor to promote a pro-crypto agenda.

As a result of his statements, tokens $MAGA and $TRUMP surged dramatically, surpassing 99% of tokens in the crypto market, becoming popular MEME stars on the LBank platform over the past two weeks.

According to on-chain data monitoring platform Arkham, the value of the crypto assets held by Trump has significantly increased, currently exceeding $12 million, including 579,290 TRUMP tokens worth $8.08 million; 464,706 ETH worth $1.76 million; 374,889 WETH worth $1.42 million, along with other MEME coins such as MVP, CONANA, and BABYTRUMP.

From five years ago, when he "did not like Bitcoin and other cryptocurrencies," even calling them a "scam," to now "supporting, affirming, and ensuring that cryptocurrency happens in the U.S.," it is undeniable that his transformation indeed keeps pace with current events. Unsurprisingly, in a poll on May 28, Trump's support rate rose due to his pro-crypto stance, according to prediction platforms like Polymarket.

Next is the current president Biden, who, influenced by Trump's statements, has also made some accommodating moves to attract more Gen Z voters.

• On May 22, Biden's team was hiring a "meme manager" to manage internet content and memes (including MEMEs);
• On May 23, the Biden administration issued a statement calling for cooperation from Congress on a "comprehensive and balanced regulatory framework for digital assets";
• On May 29, Biden sent a presidential delegation to attend the inauguration of the President of El Salvador.

At the same time, insiders revealed that Biden's re-election campaign has begun to reach out to key figures in the cryptocurrency industry, seeking guidance on "moving forward with the crypto community and crypto policy." This marks a significant "shift" from the government's previous lukewarm attitude towards the industry.

Cryptocurrency Game Theory, Consensus2024 Reveals Market Signals

At the Consensus2024 conference, ARK Invest CEO and Chief Investment Officer Cathie Wood stated that the approval of the Ethereum spot ETF application was due to cryptocurrency being an election issue.

In an interview, she said, "The interpretation at the time was that it would not be approved, absolutely not. If it were approved in the usual way, we would be questioned by the U.S. SEC. But before that, no one received such inquiries." Wood also mentioned that the sentiment in the House around the "Financial Innovation and Technology Act of the 21st Century" (FIT21) is changing, as the bill was passed last week with bipartisan support, indicating that this could be an election year issue.

During this period, Brian Nelson, Deputy Secretary of the U.S. Treasury and head of the Office of Terrorism and Financial Intelligence, also stated that the proposal by FinCEN in 2023 requiring cryptocurrency companies to report mixed transactions was aimed at increasing transparency, not banning mixers.

Nelson expressed sympathy for cryptocurrency users' desire for financial privacy but suggested that the industry and the Treasury should work together to find ways to enhance privacy while avoiding terrorist financing.

At the same time, NYSE President Lynn Martin and Bullish CEO Tom Farley discussed cryptocurrency regulation, changing U.S. politics, and the limitations and opportunities of blockchain technology in improving traditional markets. Farley emphasized the sudden shift in the U.S. political attitude towards cryptocurrency, including the dismissal of the anti-crypto chair of the Federal Deposit Insurance Corporation (FDIC) and the passage of the FIT21 bill in the House, with Republican presidential candidate Donald Trump doubling down on his support for cryptocurrency in a series of rapidly unfolding events.

"Whether it's Trump, Biden, or Michelle Obama (who will become president), you will see progress in 2024 and 2025," he added.

Previously, on May 28, former CFTC Chairman Christopher Giancarlo also stated in an interview with Forbes that the dam resisting cryptocurrency innovation in the U.S. is about to break, and cryptocurrency will eventually make a comeback in America.

Capital Flows and Politics: BTC ETF Data and Voters

According to sosovalue data, as of May 29, the total net asset value of Bitcoin spot ETFs was $57.683 billion, with an ETF net asset ratio (market value compared to total Bitcoin market value) of 4.34%. The historical cumulative net inflow has reached $13.760 billion, continuing a net inflow for 12 days.

On May 28, the world's largest crypto asset management company, Grayscale Investments®, announced the second phase of its national survey "2024 Elections: The Role of Cryptocurrency." The survey found that in the face of geopolitical tensions, inflation, and a weak dollar, two-fifths of potential voters (41%) are paying attention to Bitcoin and other crypto assets—this statistic is up from 34% in the first phase of the Harris Poll conducted since November 2023.

Similarly, more voters are indicating that they expect a portion of their investment portfolios to include cryptocurrency (47% in 2023, up from 40% in 2023). Grayscale's research director Pandl stated, "In line with the recent voting results in the House and Senate, this data further indicates that cryptocurrency has become a bipartisan issue that neither side can ignore."

The rising interest is mainly attributed to the successful launch of the Bitcoin spot ETF in January, which has since attracted a net inflow of $13.7 billion. Grayscale noted that after the ETF received regulatory approval, nearly one-third of voters became more interested in cryptocurrency as an asset class.

Outlook and Risk Reminder

The U.S. is currently at a very critical moment, needing to make many important decisions regarding government interest rate hikes, inflation, and the country's positioning on the international stage, among other macroeconomic policy issues. As public interest in cryptocurrency continues to grow, the future government attitude towards this emerging digital asset is of great concern.

As the U.S. elections approach, Trump and Biden are engaged in fierce debates over the highly controversial issue of cryptocurrency to win over voters and financial support. This move not only reflects the ambiguous attitude of U.S. political parties towards cryptocurrency but also indicates future regulatory directions and more rational risk management.

At the same time, as the election nears, frequent law enforcement activities have also created a sense of conspiracy in the market, and the SEC seems to have shown signs of taking sides. LBank reminds users to understand the inherent volatility of the cryptocurrency market and to invest with caution and informed perspectives, avoiding blind following of hype or social media trends.