Behind Trump's Participation in the Bitcoin Conference: The U.S. Election May Bring Opportunities for the Crypto Market

Original Title: “US Elections: The Next Crypto Catalyst?”

Author: Crypto, Distilled

Compiled by: Deep Tide TechFlow

Abstract:

Public information shows that Trump plans to speak at the Bitcoin conference in 2024.

Unlike the crypto tokens creating MEMEs to ride the wave of the U.S. elections, this time it is Trump who actively wants to connect with the crypto conference, and politically related tokens may experience fluctuations again.

However, aside from individual figures, the U.S. elections, as a political phenomenon, can indeed bring new variables to the crypto market. What effects can it produce?

Here is an analysis from well-known analyst @DistilledCrypto, compiled by Deep Tide.

Main Text:

2024 could be the most important election year in the history of cryptocurrency. The policies of new leaders will profoundly impact the cryptocurrency market in the coming years. Here’s everything you need to know about the upcoming U.S. elections.

Why is this year special?

One important reason is the scale. 2024 is one of the largest global election years in history, with over 60 countries (accounting for 49% of the global population) participating. (Thanks to @TheEconomist)

The global influence of $BTC:

Traditional stock investors usually focus only on elections in one country, while digital assets like $BTC are global, making all elections important.

Motivation to embrace cryptocurrency:

In recent years, mainstream views on $BTC have changed dramatically, mainly due to the increasing monetary and political influence of cryptocurrencies. Countries may reward politicians who support cryptocurrencies and punish those who oppose them.

A perfect case:

In regions understanding $BTC, candidates supporting cryptocurrencies have achieved victories, such as in Latin America. For instance, pro-Bitcoin candidates in El Salvador and Argentina have dominated. (Thanks to @Coinmarketcap)

Turning to cryptocurrency:

Just as BlackRock's attitude towards $BTC has undergone a 180-degree shift, governments may follow suit. Many governments are now embracing cryptocurrencies to gain support from this cash-rich industry.

Donald Trump's attitude has shifted dramatically: from "scam" to forming a "crypto army."

The rise of the $BTC ETF:

A key moment is the approval of the $BTC spot ETF. Nearly one-third of U.S. voters say this has made them more interested in $BTC and cryptocurrencies.

This survey was conducted by Harris Poll on behalf of Grayscale from April 30 to May 2, 2024, with 1,768 U.S. adults (aged 18 and older) who plan to vote in the 2024 presidential election. The data was weighted by factors such as age, gender, race, religious beliefs, education level, marital status, household size, income, employment status, and internet usage tendencies to ensure representativeness. (Thanks to @grayscale)

Passive retail funding?

In the next election cycle, we may see more capital flowing into $BTC. 47% of U.S. voters expect that a portion of their investment portfolio will include cryptocurrencies.

This survey was conducted by Harris Poll on behalf of Grayscale from April 30 to May 2, 2024, with 1,768 U.S. adults (aged 18 and older) who plan to vote in the 2024 presidential election. The data was weighted by factors such as age, gender, race, religious beliefs, education level, marital status, household size, income, employment status, and internet usage tendencies to ensure representativeness. (Thanks to @grayscale)

Bullish election trends:

In addition to potential regulatory impacts, elections often drive asset prices. In past election years, the performance of the S&P 500 index has been more positive than negative.

• Average return when the Republican Party wins: 15.3%

• Average return when the Democratic Party wins: 7.6%

• Average return across all election years: 11.28%

(Thanks to @morganstanley)

S&P 500 index total return in presidential election years (1928-2016)

S&P 500 election history

Since the S&P 500 index was published, there have been 23 elections. In these election years:

• 19 out of 23 election years (83%) showed positive returns.

• When the Democratic Party is in power and a new Democratic candidate is elected, the average total return for that year is 11.0%.

• When the Democratic Party is in power and a new Republican candidate is elected, the average total return for that year is 12.9%.

(Thanks to @morganstanley)

Why do elections drive asset prices up?

Elections often stimulate dynamic changes and growth in the market, which is usually achieved through an increase in the money supply.

Historically, Bitcoin ($BTC) has often performed well during periods of monetary inflation. (Thanks to @beincrypto)

Current $BTC price higher than during previous election periods:

The current price of $BTC is higher than at any previous election period (we also saw historical highs before the halving).

Some are concerned this could lead to an early peak (left-shifted cycle), while others believe we are witnessing the birth of a super cycle. (Thanks to @grayscale)

The cryptocurrency battleground in the U.S.:

The Republican Party generally holds a positive attitude towards cryptocurrencies, but what about the Democratic Party?

The Biden administration and the SEC have traditionally opposed cryptocurrencies.

However, recent approvals of multiple cryptocurrency ETFs show signs of change.

The Democratic Party's shift:

Recently, several Democratic members of Congress and the Senate voted to repeal SAB 121. This order previously imposed significant restrictions on financial institutions' engagement with Bitcoin ($BTC).

SAB 121 marked a significant change in the long-term accounting treatment of custodial assets and threatened the industry's ability to provide secure and reliable digital asset custody for clients. Other non-bank digital asset platforms constrained by SAB 121 do not have to meet the same capital, liquidity, or other prudential standards as banks, and thus do not face the economic pressures brought by SAB 121. Limiting banks' ability to provide these services leaves clients with almost no well-regulated and trusted options for protecting their digital asset portfolios, ultimately exposing them to greater risks. (Thanks to the U.S. government)

Bitcoin accounting rules:

Another significant development is the long-awaited release of Bitcoin accounting standards.

The FASB (Financial Accounting Standards Board) Bitcoin fair value rules will take effect in 2025, which may encourage more companies to adopt Bitcoin as a strategic reserve asset.

Final thoughts:

The U.S. faces choices on multiple fronts.

However, unlike previous elections, Bitcoin is now a key factor that politicians consider.

As the elections approach, the influence of cryptocurrencies has never been so great.