Stock market and cryptocurrencies: 5 possible consequences of the 2024 American presidential elections

1. Bitcoin (BTC): high volatility to be expected for the largest cryptocurrency?

The Bitcoin queen has entered the political discourse in recent months. Donald Trump positioned himself very early on as a “pro-crypto” candidategoing so far as to assert that the next BTC should be “made in America ». While his critics noted a certain opportunism on the part of the Republican candidate, the local crypto ecosystem largely followed. We have in fact seen a number ofendorsements from CEOs of blockchain companies.

For his part, Kamala Harris appeared more hesitant, faced with a controversial legacy from Joe Biden. The current president has in fact mostly ignored cryptocurrencies during his mandate, and the FTX affair, which brought to light links between the Bankman-Fried family and the Democratic party, has not helped. However, the Democratic candidate seems to have realized that potential voters were hiding in the crypto community. It has therefore made some signs of openness in recent months, declaring itself in favor of technological innovation.

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The result of all this is that Bitcoin price could be affected more than in previous US presidential elections. The subject of cryptocurrencies and monetary sovereignty has never made such headway in the public and political space. Especially since last week, the cryptocurrency has already come very close to its absolute record. Will his new “ATH” then take place this week?

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2. The polarized stock market: which sectors could be affected?

The American two-party system tends to polarize discussions and positions, and this is reflected in the stock market. Investors are already anticipating the consequences of a Republican or Democratic victorywith sectors that tend to be favored by one or the other candidate.

First of all, it should be noted that contesting the results – very likely if Donald Trump does not win – could shake Wall Street. Then, the stock market sectors affected by a Kamala Harris victory could be those linked to “green” companies, historically promoted by the Democratic Party.

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Conversely, a Donald Trump victory could benefit the defense and arms sector. The oil industries could also be more favored in the event of the victory of a candidate historically unconvinced of the existence of climate change.

Beyond specific sectors, what we must remember above all, is that financial markets are hungry for stability. The smooth running of the election should therefore have the most impact on volatility or not on the stock market. In the event of a dispute, high volatility should be expected.

3. Political “memecoins” on the rise?

Doland Tremp (TREMP), MAGA (TRUMP), Kamala Horris (KAMA), Jeo Boden (BODEN)… Cryptocurrency tokens linked to political figures have come to the forefront in recent months. And if these cryptocurrencies are not linked to the candidates, they remain affected by the electionss.

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As memecoins, however, they are particularly volatile. The TRUMP has thus lost 21% over the last seven days, while it was up sharply last week. Conversely, KAMA is up significantly by 69% over the same period. In particularly uncertain elections, the trajectories of these memecoins are even more uncertain. If they therefore appeal to a good number of “degens”, they remain particularly risky.

4. Gary Gensler fired from the Securities and Exchange Commission?

In difficulty in recent months, Gary Gensler could be even more worried if Donald Trump wins. The president of the SEC, who has been campaigning against the crypto ecosystem for years, has in fact attracted the hostility of the Republican candidate, who called for him to be fired. Separately, the strangely rushed approval of Ethereum ETFs suggested that the Democratic government had pressured Gary Gensler.

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If an SEC director does not change at the time of the US elections, it is more or less traditional for him to resign in the event of a handover to the opposition. We can therefore expect his departure in the event of a Republican victory. If the Democrats win, all bets are off and the situation is more uncertain.

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5. Will the Federal Reserve continue its rate cut?

Coincidence of the calendar: the Federal Reserve's monetary policy decision will take place the day after the election. This is one more element that will generate comments this week. Faced with the uncertain situation, the central bank could freeze its rates this time… But the context does not necessarily lend itself to this.

Inflation is in fact slowing in the United States and the job market is also looking brighter. Everything therefore encourages the “Fed” to lower its rates, but it could prefer caution. If there was a drop, it could be around a quarter of a point.

Journalist at Cryptoast since 2017, I am passionate about the issues of decentralization, privacy and regulation. I specialize in traditional economics and finance by analyzing how industry news influences the cryptocurrency industry, providing a unique and informed perspective to Cryptoast readers.

Marine Debelloir

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