Sophia’s Thoughts On The U.S. Election
Today is the 2024 U.S. presidential election, with two candidates proposing different approaches to the cryptocurrency asset class. What does a Trump or Harris presidency look like for crypto?
These are Sophia's Thoughts:
Last week’s strong PCE data shook up the crypto market, dropping Bitcoin by nearly 8% as it shifted U.S. presidential election odds in Kamala Harris’s favor.
Trump’s pivot to a pro-crypto stance includes pledges to support Bitcoin, establish a national reserve, and fire SEC Chair Gary Gensler.
Harris has been more reserved on crypto but signals openness to innovation, pledging a balanced regulatory approach, supporting emerging technologies and consumer protection.
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🚀 Last week’s market performance
The market sold off this week, losing 4.7%. Bitcoin (BTC) followed the market, but lost slightly less, closing down 3.0%. The worst performing coin of the week was THORChain (RUNE), which sold off 28.5%. The best performing coin this week was Maker (MKR) which gained a modest 2.6%.
🧐 What is your crypto mood today?
In each Sophia's Thoughts newsletter, we ask about your crypto mood. Your response to this question helps Sophia get a better sense of the pulse of crypto markets. And this ultimately translates into better insights for you when combined with Sophia's AI models. Your data empowers Sophia to provide you with even better intelligence going forward!
🔍 What Happened to Crypto Last Week?
Last week’s economic data boosted Kamala Harris's campaign and shifted the odds in the U.S. presidential race. On October 31, the release of stronger-than-expected core Personal Consumption Expenditures (PCE) data led to a shake-up in the markets. The PCE report showed a 0.3% monthly increase in core inflation for September, meeting Wall Street’s expectations but rising from August's 0.1%. Year-over-year, prices climbed 2.7%, slightly above forecasts, making gradual but uneven progress toward the Fed's 2% inflation target. The broader crypto market felt the impact of this data, losing over 7% over the following days, while Bitcoin also dropped nearly 8% upon the news. Trump's chances of winning dropped on Polymarket from around 64% to 53%, while Kamala's odds rose from 37% to nearly 47% over the subsequent days.
This inflation data was one of the final major economic data releases before the election, adding to the market's anticipation, with polls showing a close race. Following the election, the Fed’s next policy decision is on November 7, with markets expecting a 25 basis point rate cut after the 50-point cut in September. Combined with strong GDP growth of 2.8% in Q3, these indicators suggest the economy is holding up coming into the election. As the ballots roll in today, the markets remain on edge as they await the verdict.
🟥 What Trump means for crypto?
Donald Trump has shifted toward a pro-crypto stance, positioning himself as a supporter of cryptocurrency in the 2024 election. Once skeptical of the industry, previously calling Bitcoin a "scam," Trump now pledges to bolster crypto innovation in the U.S. if re-elected. Speaking at the Bitcoin 2024 Conference, he promised to establish a national Bitcoin reserve and support crypto mining. His platform also includes a pledge to fire SEC Chair Gary Gensler, a figure viewed as hostile to the industry due to his crackdowns on major exchanges like Coinbase and Binance.
Trump’s shift aligns with his running mate, Senator J.D. Vance, a long-time Bitcoin advocate who holds over USD 100,000 in Bitcoin. Vance has contributed to crypto-friendly legislation, reinforcing Trump’s commitment to a pro-crypto agenda. This alignment has resonated with crypto leaders and drawn support from influential backers like Elon Musk, who has contributed to pro-Trump PACs.
Trump has also voiced opposition to central bank digital currencies (CBDCs), which he sees as a threat to financial privacy. His campaign promotes decentralized assets like Bitcoin over a potential U.S. CBDC. While some remain cautious about Trump’s motivations, wondering if his stance is aimed at securing industry support, his promises have energized many in the crypto space. For many investors, Trump offers a potential path to reduced regulatory pressure and an environment where Bitcoin and other digital assets can grow in the U.S.
🔵 What does Harris mean for crypto?
Kamala Harris’s stance on cryptocurrency has been more reserved than her competitor, leaving many in the industry uncertain about her approach if elected. While her campaign has not highlighted crypto-specific policies, she has expressed support for “cutting-edge industries” like AI and blockchain, hinting at an openness to innovation. In October, Harris pledged to create a regulatory framework that would protect digital asset holders.
Unlike Trump, Harris has yet to define concrete policies directly supporting Bitcoin or opposing the SEC’s current regulatory path. However, some believe she is more open to crypto than the current administration, with her team reportedly consulting industry figures such as billionaire Mark Cuban. Harris’s focus on building a responsible regulatory framework suggests she may prioritize consumer protections and innovation-friendly policies without offering the overt backing Trump has promised. She pledges to “encourage innovative technologies like AI and digital assets while protecting our consumers and investors.”
For investors, a Harris presidency could mean continued caution around crypto regulation, but with a potentially more balanced approach than her predecessors. Though not the “pro-crypto” candidate that some in the industry might hope for, Harris’s focus on emerging tech signals an acknowledgment of the sector’s importance in America’s economy and its potential for growth.
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