Analysis of the Impact of the 2024 U.S. Election on the Encryption Industry

As Bitcoin has gone through three election cycles, encryption has become an important issue in the 2024 US presidential election. This article analyzes the multiple factors behind the increasing significance of encryption in elections and discusses the potential impact of the election on the encryption industry.

The Background of Cryptocurrency Becoming an Important Election Topic

The significance of Bitcoin to the United States

Strengthening demand for hedging against inflation

Since the 2008 financial crisis, Bitcoin has increasingly been seen by many as a tool to combat inflation and economic uncertainty, especially providing hope for the middle class to achieve economic independence. The decentralization and limited supply of Bitcoin make it an alternative asset under the intervention of governments and central banks.

Whether Trump or Harris wins, the fiscal policy in the United States may lead to a larger budget deficit. Over the past 25 years, the federal debt of the United States has sharply risen from 40% to 100% of GDP, and it may climb to 124%-200% in the next 10-30 years.

Strengthen the international influence of the US dollar

Stablecoins have become a focal point of policy discussions. Over 99% of stablecoins are denominated in US dollars, far exceeding the second largest currency denomination, the euro. The widespread use of stablecoins reinforces the dominance of the US dollar in the digital asset market, providing new avenues for the United States to maintain its advantage in the global financial system.

The rise in voters' interest in encryption

About half of potential American voters indicate a preference for candidates who hold a positive attitude towards cryptocurrency. Voter interest in cryptocurrency has also significantly increased among swing state voters.

The Biden administration's regulatory hunting of encryption companies.

The Biden administration strengthened cryptocurrency regulation early in its tenure and took legal action against several cryptocurrency companies.

encryption plays a key role in corporate donations

In 2024, cryptocurrency companies have become one of the major forces in political donations in the United States. Coinbase and Ripple are now the largest corporate political donors this year.

The Impact of the Election

Policy proposals of both candidates

Harris

Harris's statements on cryptocurrency policy are relatively limited. The current Biden/Harris administration has a more confrontational stance on regulating the cryptocurrency industry.

Trump

Trump stated that he wants to make America the "capital of global encryption and Bitcoin", support Bitcoin mining, and promise to protect self-custody rights. He proposed a series of encryption policy suggestions, including establishing a Bitcoin government reserve and forming a cryptocurrency advisory committee.

The situation of "divided government" may occur.

Currently, it seems that unless one party can simultaneously control both the House and Senate as well as the presidency, instability during other circumstances is almost inevitable.

The SEC leadership is likely to change.

Regardless of whether Harris or Trump wins, there may be significant changes in the leadership of the SEC.

Macroeconomic liquidity: fluctuations are inevitable, the extent of QE is the determining factor.

When the Federal Reserve lowers interest rates and global capital liquidity significantly increases, it is often also a period when Bitcoin prices continue to rise.

How Elections Affect Encryption Startups

Web3 prediction markets achieve absolute superiority over Web2 competitors

Since its launch in 2020, Polymarket has rapidly risen to become a leader in this field. Prediction markets are gradually becoming a more widely used financial tool, transcending mere speculative activities.

Predicting the future direction of the market

Currently, many trading platforms have launched prediction tokens for the US elections and related leveraged trading.

Trump's victory means encouraging encryption companies to incubate and go public in the U.S.

Under the leadership of the Trump administration, a clearer regulatory framework and a more relaxed regulatory environment will emerge. Several encryption-related companies may go public in the next year or two.

DeFi and BTCFi will be the first to benefit.

BTCFi is easier to reach consensus and gain legitimacy, with a more solid foundation, and its development is certain. If Trump wins in the upcoming election, this process may be accelerated.