Kamala Harris and the 2024 Presidential Election

This column was co-written by Frank Chaparro, director of special projects at The Block, and Laura Vidiella of MNNC Group. The views expressed are their own and do not reflect the opinions of their employers.

Kamala Harris is emerging as the front-runner for the 2024 presidential election, and crypto markets are not responding well.

Bitcoin’s Stagnation

Bitcoin’s recent inability to break through $70,000 is linked to Harris’s rising chances of defeating former President Donald Trump. Trump has promised to be the “crypto president,” vowing to maintain a strategic reserve of bitcoins and possibly providing relief to crypto companies from the current regulatory environment under Gary Gensler’s Securities and Exchange Commission.

A new Trump Administration could mean a significant reduction in U.S. regulatory hostility towards crypto. A more relaxed regulatory landscape might attract new market players and major banks, which have largely remained on the sidelines, to engage with custody, banking, and trading services. Despite the introduction of spot bitcoin and ether ETFs, institutions like JPMorgan and Citigroup have mostly avoided direct dealings with physical crypto. This scenario could shift under a Trump Administration, potentially benefiting BTC prices and the overall market.

Uncertainty Surrounding Harris

Yet, confusion surrounds Bitcoin’s stagnation. Despite the current competition between Harris and Trump, there are signals that could favor crypto under Harris’s administration. Many industry insiders speculate a shakeup at the SEC is likely if she becomes president. According to FalconX’s Austin Reid, the market hasn’t accounted for the potential benefits of either a positive Trump Administration or a more favorable Harris Administration.

“Regulatory clarity in the US plus a pro-crypto president would be a massive unlock with huge upside potential,” Reid stated. “The market doesn’t seem to be pricing that in yet, reflecting the uncertainty of the election outcome and belief in a positive Harris campaign position.”

Noelle Acheson supports this view, noting in a message on X:

“Any thawing in US regulatory hostility is pure upside. Trump dropping in the polls while Harris climbs is a factor keeping the BTC price depressed. The real upside is few believe Harris can be pro-crypto.”

Harris’s industry outreach, Anita Dunn’s involvement with a Harris PAC, a potential regulatory roadmap, and growing internal pressure within the Democratic Party suggest a possible shift in the party’s stance towards cryptocurrency. Until Harris provides a detailed crypto policy that is more favorable than the current Biden Administration, market uncertainty is expected to persist.

Market Dynamics and External Factors

However, the election isn’t the sole source of market uncertainty. Recently, a wallet tagged as U.S. Government: Silk Road DOJ transferred 29,800 BTC linked to the Silk Road website to an anonymous address, causing an instant decline in Bitcoin’s price. This movement coincided with Trump’s announcement to establish a Bitcoin reserve fund. Additionally, Republican Senator Cynthia Lummis from Wyoming has proposed a bill for the U.S. to acquire one million Bitcoin, roughly 5% of the total supply, over five years.

Bitcoin Dominance

Signs of diminishing excitement in cryptocurrency markets are reflected in Bitcoin’s growing dominance, which recently peaked at 52.7%, the highest level since April 2021. This trend indicates a reluctance to invest in altcoins amid political and macroeconomic uncertainty.

Federal Reserve and Altcoins

With recent developments, the Federal Reserve may cut rates in September if inflation stays controlled. This could benefit altcoins, potentially mirroring the rise of small-cap stocks, which have surged in anticipation of interest rate cuts. The Russell 2000 small-cap index has shown significant gains, while major large-cap indices like the NASDAQ have lagged behind.

Frank Chaparro from The Block continues to provide the latest headlines, trends, and insights on crypto and DeFi. Subscribe to The Scoop newsletter for updates on Tuesday and Friday mornings.

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