American Elections Update

It was the economy, stupid. 

America has decided! As the dust begins to settle on Trump’s historic win, the world of crypto starts to turn its attention as to how his presidency might unfold.
That the crypto-friendly candidate has won the election is widely viewed as a boon for the industry and presents new opportunities for market expansion and adoption rates in the US. Questions as to how Trump prevailed will dominate discussions over the coming months. However, it is evident from opinion polls that the economy was central to many Americans’ decision-making processes. 

Although the American economy has performed well under the Biden administration, it is evident that not all Americans are feeling the effects. In fact, many Americans feel worse off than they did four years ago. This interest piece explores how crypto will fare under Trump, who once called Bitcoin a scam, and forms the first of two articles on Trump’s successful presidential campaign. The latter will follow next week as BCB Group reflects on the outcome of Tuesday’s election results one week on. 

The future of Crypto 

The old adage goes that when America sneezes, the rest of the world catches a cold. Well in the case of crypto firms, they might start sneezing soon. Bitcoin has climbed to $75,389 as it hit new highs off the back of the election results. US shares on Wall Street also hit an all time high and the dollar surged against other currencies with GBP falling 1.41% against USD. Dogecoin has also jumped 18% overnight. Amongst many promises, crypto firms are hoping that a Trump administration will usher in a new bill supporting crypto adoption.  Moreover, there is hope amongst crypto firms that the incumbent Securities and Exchange Commission (SEC) chair, Gary Gensler, will be forced from office under Trump. With Gensler at the helm, the SEC has filed several lawsuits against the largest crypto firms in America, including crypto.com, Kraken, and Coinbase.

But why has Trump become the pro-crypto candidate? Well with the high cost of running a presidential campaign the media personality turned politician sought alternative ways to fund his campaign. Step forward crypto. The former crypto sceptic funded large parts of his presidential campaign with digital assets and crypto investments. With prominent pro-crypto backers, including Elon Musk and Robert F. Kennedy, this comes as no surprise. The use of crypto to help fund Trump’s campaign showcases its versatile use. Furthermore, Trump has appointed Musk to head a commission on government waste. The relaxation of American crypto regulation will spur investment and adoption across the country. With companies such as Microsoft discussing the potential of investing in Bitcoin, it showcases how crypto is becoming mainstream in the US. 

This is great news for crypto investors and firms worldwide. This is compounded by Trump’s ventures into crypto through World Liberty Financial. Although the venture has not received universal backing, it is another sign that the crypto landscape is changing. Moreover, potential cuts to the Federal Reserve’s interest rate will incentivise borrowing and push crypto adoption throughout America. This will serve the sector well as Trump plans his return to the White House. 

Geopolitical Uncertainty

Away from the world of crypto, policymakers are debating how Trump will shape geopolitics. During his previous tenure, Trump’s foreign policy was characterised by his business mentality, leading to deal making and straight-forward policies. This will likely continue into his next term. Amongst myriad promises, Trump has pledged to end the war in Ukraine within 24 hours and end the conflict in the Middle East. How he intends to achieve this remains to be seen, however. Other facets of Trump’s foreign policy agenda will include American isolationism, economic protectionism, and threats to dismantle NATO. It will also see the continuation of America’s trade war with China. This will all lead to uncertainty in capitals around the world as leaders prepare for a second Trump administration. This time, however, America’s allies have prepared for his incumbency. This includes the drawing up of contingency plans and meetings between world leaders. For example, Keir Starmer met with Trump and his aides in New York back in September. This bodes well for the so-called ‘special relationship’ but policymakers should remain cautious. 

Conclusion 

Trump’s seismic victory in the US presidential election will likely pave the way for increased crypto adoption and opportunities in America. The world’s largest economy will become, in Trump’s words, a crypto “superpower”. This is an exciting time for the sector and crypto firms will watch developments closely. Trump’s administration, however, will likely bring uncertainty and instability in other realms, including geopolitics and climate change. Questions abound. Will Trump’s pro-crypto outlook outweigh the possibility of  market instability? How will Trump’s economic policies affect world markets? Next week’s article will attempt to answer these questions as analysts at BCB Group monitor developments across the Atlantic. 

Disclaimer

The information contained in this document should not be relied upon by investors or any other persons to make financial decisions. It is gathered from various sources and should not be construed as guidance. The information contained herein is for informational purposes only and should not be construed as an offer, solicitation of an offer, or an inducement to buy or sell digital assets or any equivalents or any security or investment product of any kind either generally or in any jurisdiction where the offer or sale is not permitted. The views expressed in this document about the markets, market participants and/or digital assets accurately reflect the views of BCB Group. While opinions stated are honestly held, they are not guarantees, should not be relied on and are subject to change. The information or opinions provided should not be taken as specific advice on the merits of any investment decision. This document may contain statements about expected or anticipated future events and financial results that are forward-looking in nature and, as a result, are subject to certain risks and uncertainties, such as general economic, market and business conditions, new legislation and regulatory actions, competitive and general economic factors and conditions and the occurrence of unexpected events. Past performance of the digital asset markets or markets in their derivative instruments is not a viable indication of future performance with actual results possibly differing materially from those stated herein. We will not be responsible for any losses incurred by a client as a result of decisions made based on any information provided.