Election 2024: What's At Stake For Cryptocurrency

The 2024 U.S. presidential election is just around the corner, and its implications go beyond traditional politics, extending deeply into economic and technological realms, including cryptocurrency. As candidates Vice President Kamala Harris and former President Donald Trump vie for the Oval Office, the digital asset landscape is closely watching, as each candidate’s policies may shape crypto’s regulatory and market future in the United States—and potentially influence global financial systems and blockchain technology.

Crypto And The Economic Environment Of 2024

This election arrives amidst significant monetary changes, as the Federal Reserve recently implemented a 50-basis-point rate cut in September 2024, lowering rates to a target range of 4.75%-5%. This first rate reduction since 2020 represents a cautious step aimed at alleviating inflationary pressures while supporting labour markets, which has made borrowing less costly and opened a path for renewed interest in more speculative assets like cryptocurrency. For months, high rates have drawn capital towards more stable, yield-bearing investments, so reduced rates could see some investors re-engage with high-growth sectors like digital assets.

Outside of the U.S., global economies are also managing inflationary and currency challenges with central banks worldwide adjusting their monetary policies or setting out to do so. With easing inflation and potential rate reductions on the horizon in regions such as Europe and Asia, there is a broad economic shift that could further encourage cryptocurrency’s appeal as a hedge against economic uncertainties. In particular, Bitcoin and stablecoins may see greater interest as globally accepted assets and thus on the way to further consolidate their position as a decentralised store of value and liquidity in an environment marked by fiscal and economic volatility.

Crypto Prediction Markets In Action During The Election Season

With the 2024 U.S. presidential election, crypto-based prediction markets have emerged as decentralised tools for gauging political sentiment and forecasting outcomes. Platforms like Polymarket have surged in popularity this election cycle, as their blockchain-based, real-time predictions allow participants to bet on electoral outcomes and other political events. Around 88% of Polymarket’s trading volume in 2024 is dedicated to election-related markets - a heightened activity reflects the platform’s unique appeal in aggregating global sentiment free from traditional polling biases and presenting itself as a valuable tool for capturing nuanced voter perspectives.

Polymarket’s odds for Harris and Trump have fluctuated in response to campaign developments and policy announcements, which showcases how the prediction market captures the immediate reactions of voters and investors alike. For instance, in late summer, Trump’s odds climbed to nearly 55% as his campaign leaned heavily into pro-crypto messaging. By appealing to the crypto community with promises of favourable policy changes, Trump tapped into a key voter segment that leads to a surge in support on Polymarket . Meanwhile, Harris’s odds have shown a more gradual increase boosted by her campaign’s focus on regulatory balance, which is drawing in institutional investors who value stability in crypto policies. These shifts reveal how prediction markets offer a dynamic view of public opinion that can adjust more quickly than traditional polling in response to new information.

Data on October 31, 2024 on Polymarket's election pool. Source: Polymarket

Beyond tracking voter sentiment, prediction markets like Polymarket also play a significant role in shaping global perceptions of the election’s outcome, as bettors from various regions participate and express their views through wagers. The platform has become a space where global opinions converge, with its decentralised nature allowing for a broader range of participants than conventional, geographically-bound polling. These markets thus serve not only as barometers of U.S. electoral sentiment, but also as indicators of international perspectives on U.S. Leadership as well as providing insight into how the world anticipates and reacts to shifts in American political dynamics.

Election Outcomes And Their Impact On Global Crypto Markets

The outcome is poised to significantly influence both U.S. and global regulatory environments for cryptocurrency. If they stay committed to fostering a permissive landscape for digital assets, a Trump administration could support policies like tax incentives for Bitcoin mining - an industry where the U.S. currently commands around 35% of global hash power. Trump’s platform envisions economic expansion through technology and, as a result, might as well reduce regulatory pressures on key players in the crypto sector and position the U.S. as a global blockchain leader. His newfound strong pro-crypto stance has resonated with the digital asset community, as evidenced by his favourable odds on Polymarket, where he is currently favoured by crypto enthusiasts by a 62%-38% margin.

Conversely, a Harris administration would likely focus on regulatory stability, with an emphasis on consumer protection, especially within the stablecoin market, which comprises roughly 15% of the crypto sector. This approach is well-timed, given recent regulatory actions, such as the DOJ’s probe into Tether, which did briefly impact Bitcoin’s price and underscore the broader market’s sensitivity to stablecoin-related regulatory developments. Under a Harris administration, we could expect a push for transparency and enhanced oversight, which may attract conservative investors seeking secure, structured markets. The establishment of rigorous standards could also encourage other nations to adopt similar regulatory frameworks, where a more stable international environment for crypto and, obviously, confidence in the digital asset ecosystem can be achieved.

The Countdown Begins

As November 5 approaches, the global crypto community remains highly attuned to potential policy changes that could redefine the industry’s trajectory. With nearly half of American voters considering crypto policy a factor in their decision-making, this election highlights the growing relevance of digital assets within mainstream political discourse. The next administration’s approach will likely shape not only the future of U.S. markets but also influence global regulatory standards by setting benchmarks for how digital assets are valued, integrated, and overseen across economies.

Bitcoin has recently surged to its highest price since April 2024, reaching $73,544 just a week before the election. This 6% rise on October 29 puts Bitcoin’s monthly gains at 13% to outpace traditional stocks in the U.S., Asia, and Europe for the same period. Institutional interest has been a key driver, especially following the approval of spot Bitcoin ETFs in January, which has drawn billions in investments from firms like BlackRock and Grayscale to add liquidity and confidence to the market.

Bitcoin’s price surge has also aligned with an increase in Trump’s odds on global prediction markets, as his pro-Bitcoin platform has garnered enthusiasm among digital asset investors. His promises of crypto-friendly policies have fuelled bullish sentiment across the sector. With both candidates’ policies likely to shape the strategic future of digital assets, the world is watching closely to see how the election’s outcome could redefine crypto’s role in the U.S. and across the global financial landscape.

Disclaimer: The opinions expressed in this article are for informational purposes only. This article does not constitute an endorsement of any of the products and services discussed or investment, financial, or trading advice. Qualified professionals should be consulted prior to making financial decisions.