Sophia’s Thoughts On Trump & Crypto
President Trump has declared that he will be the “crypto president.” But does his re-election bid really have an impact on crypto returns?
These are Sophia’s Thoughts:
President Trump reversed course and announced several pro-crypto positions for his re-election campaign.
But our analysis shows that much of President Trump’s newly voiced pro-crypto stance was already priced in by the market.
We do not believe that crypto will play a critical role for the 2024 US election.
Instead, we believe that crypto may play an indirect role as part of a broader conversation about inflation, which continues to be a big concern for US voters.
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🚀 Last week’s market performance
It was another rough week for the market, which lost 4.9%. Bitcoin (BTC) only lost 4.4%. The worst performing coin of the week was Matra (OM), which lost 31.6%. It was a big correction after Mantra hit a new all-time high. The best performing coin of the week was Rocket Pool (RPL), which gained 35.6%.
🧐 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!
🇺🇸 The Crypto President
Former President Donald Trump has taken a decidedly pro-crypto stance as he campaigns for the 2024 presidential election in the United States. At a recent fundraiser in San Francisco, Trump declared his intention to make the United States a leader in the cryptocurrency industry, contrasting his approach with that of President Biden’s administration.
Trump claims to support self-custody rights for crypto users, promising that individuals will maintain control over their assets without government interference. He is also committed to fostering innovation and growth within the industry, contrasting his approach with what he views as restrictive measures from the current administration.
“I will support the right to self-custody. To the nation’s fifty million crypto holders, I say this: I will keep Elizabeth Warren and her goons away from your bitcoin. ”
However, not all Trump positions on crypto are positive. Trump strongly opposes the creation of a central bank digital currency (CBDC) in the United States. He argues that a CBDC would centralize control and threaten personal financial freedom. He believes a CBDC could lead to increased governmental surveillance and control over financial transactions.
All in one, Trump’s current crypto stance marks a notable change from his earlier criticisms of Bitcoin and other cryptocurrencies. It reflects a broader trend of increasing political engagement with the crypto industry, with different approaches to regulation and support emerging across the political spectrum. As the election approaches, Trump’s crypto policies are expected to be a significant aspect of his campaign, reflecting the evolving landscape of digital assets in the political arena.
How Trump’s Bitcoin Evolution Could Scramble The Electoral Map (Forbes)
How Crypto Money Is Poised to Influence the Election (The New York Times)
🔶 Does it Trump?
We analyzed how Trump is impacting the crypto market. Using Sophia’s proprietary sentiment analysis, everyday we measure how impactful different keywords are when mentioned in social chatter about cryptocurrencies. We find that the keyword “trump” has one of the most positive impacts on crypto performance when mentioned in social chatter. The keyword “trump” has a more positive influence on crypto returns than 65% of the close to 2,800 keywords that Sophia tracks on social chatter each day.
We observe that the influence of the keyword “trump” already started developing in mid 2023 and peaked early in 2024. Back in 2023, it started to become known that President Trump had some investments in crypto. The peak in association between Trump and crypto returns in 2024 coincided with a push by Republican lawmakers on new legislation embracing crypto in the US.
But our analysis also suggests that the crypto influence of the keyword “trump” is fading in recent times. A recent survey by Grayscale that was run at the end of April 2024 indicates that more and more people are now embracing cryptocurrency investments in the US. However, the survey also indicates that the propensity to invest in crypto is not influenced by political alignment. Indeed, the survey by Grayscale suggests that crypto is a bipartisan topic now. President Biden appears to have noticed and has now opened up to the possibility of accepting crypto donations via Coinbase.
🧠 Sophia’s Intelligence
While President Trump may be trying to make crypto a focal topic of his re-election campaign, we are less convinced that crypto will play a decisive role in the 2024 election. At best, we believe crypto will have an indirect effect.
Right now, one of the most important issues for voters in the US is inflation. Inflation has remained stubborn at around 3% in the last couple of months, above the Fed’s target of 2%. If inflation remains above the 2% target for much longer, it could have a real impact on the US election in November.
How Presidential Elections Influence The Federal Reserve (CNBC)
Biden Gets Good and Bad News From Inflation Data and Fed Meeting (Bloomberg)
Skyrocketing child care costs show how inflation could impact 2024 election (ABC News)
Inflation has been one of the key drivers of cryptocurrency returns in the last 1.5 years. And the recent survey by Grayscale suggests that inflation is a bigger concern for Republican voters.
If Trump can tie the conversation about inflation to crypto, then crypto could become a more relevant topic for the 2024 US election. Alternatively, if inflation falls prior to the election and the Fed loosens its grip on interest rates, then the crypto market is likely to get a boost. In that case, we envision both President Trump and President Biden vying for crypto voters, reinforcing the notion that crypto is becoming a bipartisan issue.
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