Four Major Predictions: How Will the U.S. Election Impact the Future of BTC and Digital Assets?
BTC first emerged more than three election cycles ago. However, the 2024 U.S. Presidential Election marks the first time that Bitcoin (and the broader cryptocurrency space) has been viewed as a key election issue. The fervent believers in Satoshi Nakamoto’s ideals, laid out in the whitepaper, have grown into an influential group of single-issue voters. Despite recent bear markets and wider industry turmoil, such as the collapse of the once-celebrated FTX exchange, they remain committed to the cause. Lately, the tides have shifted for the industry and its supporters. Bitcoin’s price has stabilized, and institutions like the world’s largest asset manager, BlackRock, are claiming that Bitcoin is the store of value for this generation. With campaign season heating up, the question remains: What role will this modern form of currency play in the future of the world’s most powerful economy?
According to the Federal Reserve, by 2024, the purchasing power of the dollar will have diminished to only 3% of its original value, leading many emerging economies to consider trading in currencies other than the dollar. There is concern that current monetary policy decisions, aimed at avoiding a recession, could actually lead to hyperinflation and an economic downturn in the U.S. In recent years, the economy has swung between a period of explosive growth, fueled by loose monetary policies, and teetering on the edge of an economic collapse due to an intensifying debt crisis. The escalating geopolitical tensions and conflicts of the past few years have only worsened this volatility.
This chaos has widened the wealth gap, with the upper class multiplying their wealth while the middle class continues to lose ground. Since its inception, Bitcoin has been viewed by many as a potential hedge for the middle class against economic volatility. It’s hoped to be an inflation-resistant asset that can offer financial independence to the shrinking middle class. Yet, the dollar remains the backbone of the global economy. Despite its declining purchasing power, it continues to hold the trust of many retail investors.
Today, the U.S. finds itself at a unique crossroads: on one side, the devaluation of the dollar, and on the other, the potential of Bitcoin to solve many of the financial issues facing the middle class. How the latter is discussed and addressed will have the biggest impact on what the world’s most important economy looks like 25 years from now.
Against this backdrop, here are four bold predictions for how this year's election will impact the future of Bitcoin and digital assets in the U.S.
1. Regardless of Who Wins, Gary Gensler Is Likely Out
Since assuming the role of chair of the U.S. Securities and Exchange Commission (SEC), Gary Gensler has made few friends in the cryptocurrency community. While he has secured some notable victories, his enforcement-heavy regulatory approach has also faced court losses. Former President Donald Trump vowed to "fire" Gensler if elected, though that never materialized. Traditionally, SEC chairs resign when the White House changes hands during a term. If we see Vice President Kamala Harris secure victory, don’t be surprised if her administration takes a similar stance to her opponents, seeking to win favor with the industry. Change is on the horizon.
2. A Harris Victory Could Benefit Bitcoin, While a Trump Win May Favor Ethereum
Bitcoin has largely acted as a commodity, and when U.S. interest rates fall, making capital cheaper, Bitcoin tends to surge. Given that a Harris administration would likely continue current monetary policies and increase government spending, the crypto market could remain stable or even climb. Conversely, a Trump victory could incentivize crypto companies to incubate in the U.S.—something the country has lacked. Under Trump, a clearer regulatory framework could be introduced, opening up more opportunities for decentralized finance (DeFi). Since the DeFi ecosystem is largely built on Ethereum, a Trump administration may favor it and other Layer 1 protocols.
3. A Harris Administration May Introduce a Crypto Capital Gains Tax
While an election victory would give Harris the mandate to pursue her policy agenda, she has already spent three and a half years in an administration that considered capital gains taxes on crypto. Given the volume of capital set to flow into the asset class, as cryptocurrencies integrate with traditional finance, it’s hard to imagine the U.S. government wouldn’t try to get a piece of the pie. Under a Trump administration, which has clearly expressed a desire to "focus" on crypto, the likelihood of increased taxes seems slimmer.
4. Trump Will Unveil a Formal Bitcoin and Digital Asset Plan Before the Election
While Harris has largely stayed silent on digital assets during the campaign—only mentioning them in passing alongside other emerging technologies—Trump has been openly courting the "crypto vote." The former president was the first and only presidential candidate to attend the 2024 Bitcoin Nashville event this summer, where he famously stated that Bitcoin’s future lies in America and that he will "keep Elizabeth Warren and her mob away from your Bitcoin." He also launched his own DeFi project, World Liberty Financial. If there is a formal policy proposal on cryptocurrencies and digital assets before the election, it’s most likely to come from the Trump campaign.
Change almost always takes far longer than anticipated and occurs in ways never originally planned. Bitcoin is no exception. The mission and message behind Bitcoin may be one of the most powerful signals of liberation in centuries. However, if the core principles of Bitcoin and cryptocurrencies are to be realized, the institutions that hold power will face the greatest losses.
