The Trump-Harris rivalry affects the cryptocurrency market

Author: Climber, Golden Finance

The cryptocurrency market is increasingly influenced by the U.S. elections, from the accelerated approval of Ethereum spot ETFs to the recent divergence of crypto trends from the stock market, all indicating that the choice of the new U.S. president is becoming a barometer for crypto investors.

Since the probability of Harris being elected on Polymarket first surpassed that of Trump, the crypto market has been on a continuous decline. As of the time of writing, BTC has dropped from the $62,000 level to around $56,000. The main reason behind this is that Harris has yet to clearly express her stance on cryptocurrencies since her nomination, and as a successor to Biden, she is likely to continue the latter's strict regulatory policies.

Trump and Harris, as political adversaries, often have opposing views, and personal intentions may yield to electoral votes under the pressure of the election. For instance, Trump previously did not trust cryptocurrencies but is now vocally supporting Bitcoin. In contrast, Harris currently leads Trump in three key states, five swing states, and even on Polymarket, and she did not attend the "Crypto4Harris" event. Therefore, Harris may uphold policies that oppose those supported by Trump.

Market Decline Amid Election Fog and Frequent Exits

Following Trump's assassination attempt on July 13, which boosted his approval ratings, the crypto market experienced a surge, with BTC rising from about $57,500 to $68,500. Trump's speech at the Bitcoin conference further propelled BTC back into the $70,000 range.

After Biden withdrew from the race on July 22 and nominated Harris as the 2024 Democratic presidential candidate, her poll numbers began to climb, surpassing Trump by the end of July. Additionally, the U.S. government transferred $2 billion worth of BTC, leading analysts to speculate that the Biden administration would sell all Bitcoin before Trump takes office. At that time, combined with the impact of Japan's interest rate hike, the crypto market faced a sharp decline, with BTC dropping from $70,000 to $49,000.

On August 8, the Democratic Party launched the "Harris's Cryptocurrency" campaign, causing the crypto market to rebound, with BTC rising over 10% throughout the day. However, that day it was reported that Harris did not attend a later crypto roundtable meeting, and as her probability of winning on Polymarket equaled and then significantly surpassed Trump, the crypto market faced another round of turbulence and decline.

Especially when market news revealed that Harris was leading Trump in three key states and five swing states, BTC's decline was most pronounced. Currently, there are media reports that Harris missed the "Crypto4Harris" online meeting organized by Democratic cryptocurrency supporters on August 15, while her digital ad spending exceeds Trump's by tenfold.

In contrast, the U.S. stock market has been on a continuous rise since August 8, with the Dow Jones recently surpassing 40,500 points and the Nasdaq nearing 17,600 points.

Regarding the aforementioned impacts, brokerage firm Bernstein stated in a research report that if Trump wins the U.S. election, it would be beneficial for the crypto market, while a Harris victory would be detrimental. The report also pointed out that Bitcoin weakened after Polymarket odds and polls shifted to support Harris.

Harris's unclear stance on cryptocurrencies has raised concerns among investors about potential risks, even from Trump's side, as some institutions indicate that he may not be able to take real action.

Circle CEO Jeremy Allaire stated that cryptocurrencies have become a bipartisan concern, but more actions are needed to solidify this position. Additionally, he expressed skepticism about the likelihood of Trump fulfilling these promises.

The competition between Trump and Harris has also indirectly caused turbulence in the crypto market, with significant contract liquidations occurring during the volatile ups and downs. On August 16, the total liquidation amount exceeded $200 million, on August 9 it surpassed $200 million, and on August 5 it exceeded $1 billion…

The continuous decline has also wiped out the gains of many blue-chip altcoins this year, leading many OGs to begin questioning the correctness of entering the Web3 industry and considering exiting the market.

Notable crypto KOL Xiao Erduo expressed a strong crisis of trust in the crypto circle, stating that he has already sold his principal and cleared out all coins except Bitcoin.

Famous trader Ansem also mentioned that his trading performance has been extremely poor recently and is seriously considering a permanent exit from the market.

Harris's Uncertain Stance and Political Disputes Conceal Investment Risks

Looking back at the recent decline in the crypto market, the reasons are closely related to the increase in Harris's probability of being elected and her unclear stance on the crypto market.

Previously, there were reports that Harris's campaign team was seeking to restart contact with Bitcoin and crypto teams, such as those from Coinbase, Circle, and other crypto companies. However, the team stated that re-establishing connections with the crypto industry is not for fundraising purposes but to pave the way for reasonable regulation.

As for Harris herself, she has not participated in crypto-related meetings such as the Bitcoin conference, crypto roundtable meetings, or the "Crypto4Harris" online meeting.

Moreover, Harris has yet to publicly commit to supporting the cryptocurrency industry and may continue the Biden administration's strict regulatory policies on cryptocurrencies.

Alex Thorn, research director at Galaxy Research, previously analyzed that Harris works closely with key anti-crypto officials like Brian Deese and Bharat Ramamurti. Deese has published articles on the White House website emphasizing the risks of cryptocurrencies, while Ramamurti is considered a top crypto critic in the White House. Their involvement suggests that a Harris administration is unlikely to soften its stance on cryptocurrency policy and will continue to support strict regulatory measures to protect consumers and the financial system's safety.

Harris's running mate, Walz, has explicitly advocated for stricter regulation of cryptocurrencies, and recently even returned a $4,000 political donation from a former FTX executive.

On August 10, the Federal Reserve's enforcement action against Customers Bancorp also raised doubts in the community about Harris's sincerity in trying to mend relations with the crypto industry.

Various signs indicate that Harris is not in a hurry to court the crypto market, and since she is already leading Trump without making a statement on the crypto market, she may not urgently need funding and voter support from the crypto sector unless necessary.

In terms of fundraising, Trump's campaign team announced that they raised $138.7 million in July, while Harris raised $200 million in her first week of campaigning. The Trump team pointed out that as of August, their cash reserves were $327 million, which puts them under some financial pressure with only three months left until the election.

On the other hand, as political adversaries, Trump and Harris often attack each other, diverging significantly in their political positions. For instance, on August 10, Harris stated that the Federal Reserve's actions should be independent of the president. However, Trump previously stated that if elected, he would seek to influence U.S. monetary policy.

This means that regarding their attitudes toward cryptocurrencies, Harris is entirely likely to oppose Trump and continue to strengthen regulations on the crypto market. This is precisely the potential risk that many institutions and ordinary investors are concerned about.

At this stage, the conflict between Trump and Harris indeed increases the uncertainty in the crypto market. However, the good news is that discussions and news surrounding "Harris's crypto friendliness" are becoming more frequent, especially as both have some crypto-friendly rumors or actions circulating.

From Harris's Side:

On August 15, Circle's CEO stated that Harris's campaign team is actively engaging with the crypto industry and mentioned that a representative from Harris's campaign attended the previous crypto roundtable meeting.

On August 8, the Democratic Party launched the "Crypto for Harris" campaign, aimed at attracting the 40 million American voters who own digital assets and indicating the party's stance on promoting the blockchain and cryptocurrency industry.

On August 1, it was revealed that Harris's team contacted individuals from crypto companies like Coinbase, Circle, and Ripple Labs to ease the tension between the Democratic Party and the crypto industry.

Additionally, there are reports that Harris's husband is also a "cryptocurrency enthusiast."

From Trump's Side:

Trump has repeatedly criticized cryptocurrencies during his term, calling them "not money," based on "castles in the air," and "potentially promoting illegal activities," and he considered Bitcoin a "scam." However, during this year's presidential campaign, his attitude has undergone a 180° turn.

Trump's representative declarations and commitments regarding the crypto market include: if re-elected, he will replace the SEC chairman Gary Gensler, who holds a critical stance on cryptocurrencies; if elected, the government will 100% retain its Bitcoin holdings; and he aims to keep the U.S. at the forefront of the cryptocurrency sector.

Moreover, Trump's official store supports Bitcoin payments for products such as shoes and perfumes.

Additionally, Trump's son, Donald Trump Jr., has stated that Bitcoin is a means to hedge against inflation and authoritarian governments, and he recently announced the launch of a Telegram channel called "The DeFiant Ones," where he will also introduce a crypto project.

Trump's second son, Eric Trump, stated that he is about to launch a crypto project related to "digital real estate," and he has previously expressed that he has truly fallen in love with cryptocurrencies/DeFi.

Conclusion

At this stage, the competition for the U.S. presidency is becoming increasingly intense, and the upcoming debates between Trump and Harris are making the future of the crypto market uncertain. Especially since Harris has not yet made a statement regarding the crypto market, many investors have chosen to wait and see. If crypto regulations tighten, the risks for the already volatile crypto market will clearly outweigh the opportunities.