How is the “Trump Trade” impacting cryptocurrency markets?

Cryptocurrencies have always been a wild ride, but when politics gets involved, things get even more interesting and unpredictable. As the 2024 US presidential election approaches, the role of politics in shaping cryptocurrency markets and trading behavior has become a hot topic, and the influence of political figures and events in this regard is equally undeniable.

As one well-known crypto media platform suggested, political leaders who support crypto innovation could attract younger, tech-savvy voters. On the other hand, those who support strict regulations could attract voters who are concerned about security and fraud. How these candidates approach cryptocurrencies could influence voters’ opinions and, in turn, impact the market.

What do the numbers say?

The growing importance of cryptocurrency in US politics is evident as presidential candidates are now accepting cryptocurrency donations. Harris Poll since November 2023 has shown that 47% of American voters think cryptocurrencies will be part of their investment portfolio in some way. This, along with the approval of Bitcoin and Ether exchange-traded funds (ETFs), prove that the future for cryptocurrencies looks bright.

Source: Cointelegraph

Interestingly, another sponsored by Grayscale Harris Poll Insights in April found that “nearly half” of voters “do not trust political candidates who would interfere with cryptocurrencies.” The report also found that 3 in 10 people are more likely to support a pro-cryptocurrency politician.

Source: Harris Poll Insights 2024

Historical context

Looking back at 2017, President Trump’s signing of the Tax Cuts and Jobs Act had a significant impact ripple effects on the stock market and the cryptocurrency market. The act has substantially increased BitcoinThe value of the cryptocurrency reached nearly $20,000 in December 2017.

However, in 2018, the Trump administration’s crackdown on crypto scams and fraudulent ICOs caused Bitcointhe price of ‘sa to fall. This shows how events and political statements can affect the market in a positive or negative way.

The impact of politics on cryptocurrencies is not limited to the United States. Global political events and figures also impact the market. For example, regulatory decisions in China have historically caused significant market movements. In 2021, China’s crackdown on Bitcoin mining activity has led to a massive decline Bitcointhe price of .

On the contrary, El Salvador’s announcement of Bitcoin as legal tender has had a positive impact on the market. According to the data, the closing price for Bitcoin in June of that year it was around $35,127.08 and in September the BTC price closed at $43,858.37, once again reflecting the market’s sensitivity to political decisions.

The “Trump Trade” and Cryptocurrencies

Former President Donald Trump, who once called Bitcoin a “scam” and insisted that it “competes with the dollar,” which he wanted to remain “the world’s currency,” recently expressed strong support for the sector.

His promises to support the United States cryptocurrency miners AND reduce regulations have earned him industry support and funding, such as the $1 million in Ethereal (ETH) from former Kraken CEO Jesse Powellanother $2 million in Bitcoin (BTC) from Winklevoss Twinsand counting.

This shift in position, often referred to as the “Trump Trade,” has made Bitcoin a key issue in the 2024 elections.

The Trump Trade refers to the simultaneous surge in U.S. stocks, Treasury yields, and the dollar that followed Donald Trump’s victory in the 2016 presidential election. Bernstein analysts suggest that cryptocurrencies could emerge as the top Trump Trade during the current election cycle, with Republican prospects improving and the party’s standard-bearer increasingly embracing a pro-crypto viewpoint.

This shift in political stance towards cryptocurrencies is not just a strategy to finance election campaigns, but also a reflection of the growing importance and acceptance of digital assets in the political arena.

The Demographics of Cryptocurrency Voters

Furthermore, the demographics of crypto voters are a diverse group, not only in terms of political allegiances, but also in terms of social and psychological characteristics. Experts are divided on how the 2024 election will affect the cryptocurrency market. Some believe the market could rise if a pro-crypto candidate wins the election. Others fear that too much freedom could lead to scams and instability.

A study published in the journals PLOS ONE in 2022 found that 30% of American adults have owned some form of cryptocurrency. These people have a range of beliefs and political identities. The study also found that the cryptocurrency market could change significantly as the election approaches.

Source: PLOS ONE report

How Cryptocurrency Policy Could Impact Elections

Cryptocurrency policy is playing a bigger role than ever in the 2024 presidential election. This is the first election in which major candidates are prominently discussing cryptocurrency. For example, as noted above, Trump is now accepting cryptocurrency donations for his campaign and has given crypto industry advocates like the CEO of Messari Ryan Selkis a platform to speak out about their beliefs. This is the beginning of their effort to attract the anti-central bank digital currency (CBDC) and pro-crypto vote.

On the other hand, the Biden campaign says it is talking to cryptocurrency companies to seek guidance on a good “cryptocurrency community and policy to follow going forward,” after Biden in May vetoed the SEC’s Staff Accounting Bulletin 121 (SAB 121), which would allow financial institutions to host cryptocurrencies, arguing that the act would “jeopardize the well-being of consumers and investors.”

Clearly, Trump’s pro-crypto stance has put pressure on the President Joe Biden to soften his previous hawkish stance. However, many believe Biden is staunchly opposed to the cryptocurrency industry.

If Trump wins the election, we could see a surge in cryptocurrency investment. If the election tilts more toward the Republicans, cryptocurrencies could become the main Trump Trade, and hopes for a better regulatory environment could change the narrative around blockchain.

Perhaps in a continued effort by the Trump camp to secure the crypto vote, Decrypt Media recently reported that Trump will again speak to the historic Bitcoin Conference in Nashville in less than two weeks, despite having escaped an assassination attempt by The Weeknd.

The marriage of politics and cryptocurrency is a fascinating and complex topic. The influence of political figures and events on cryptocurrency markets and trading behavior is undeniable. And as Coinbase CEO Brian Armstrong He said last year: “Being anti-crypto is a bad political strategy for 2024.” And here we are.

Author: Ayanfe Fakunle

The #DisruptionBanking editorial team has taken every precaution to ensure that no person or organization has been negatively influenced or offered any type of financial advice in this article. This article is absolutely not financial advice.

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