Just over two years ago, Sam Bankman-Fried walked the halls of Capitol Hill. He handed out campaign donations and tried to convince lawmakers to pass crypto legislation. Today, he waits in a Brooklyn federal detention center. In a twist of fate, his vision came true two years too late: the U.S. finally had its crypto election.
When Coinbase launched its “Stand with Crypto Alliance” in August 2023, many were skeptical. Was there really a single “crypto voter,” let alone the 50 million Americans Coinbase mentioned as a potential bloc? Even Coinbase and its allies seemed to agree. Their Super PACs spent tens of millions on ads in key races but avoided mentioning crypto altogether.
Yet, crypto won big, all the way to the top of the ticket. The MAGA Silicon Valley crowd helped Donald Trump secure his second term. Crypto acted as the front line in making tech’s shift to the right more acceptable politically. Figures like Coinbase’s Brian Armstrong have been in open conflict with the Biden administration and SEC Chair Gary Gensler for more than a year.
After calling Bitcoin a “scam” as recently as 2021, Trump embraced the crypto industry’s deep pockets. He spoke at major crypto conferences, visited a Bitcoin bar in New York, and pledged to commute the sentence of Ross Ulbricht, the founder of Silk Road. This showed how far down the crypto rabbit hole he had gone. Whether he keeps his promises remains to be seen.
Down the ballot, pro-crypto candidates won across both parties, backed by campaign donations that would make Sam Bankman-Fried blush. According to Stand with Crypto, 261 pro-crypto candidates won in the House and 17 in the Senate. Several of the industry’s biggest foes, including Ohio Senator and Banking Committee Chair Sherrod Brown, lost. This paves the way for blockchain legislation to have a chance of passing next session or even during a lame-duck compromise.
Then there’s the rise of electoral betting markets. Crypto-powered platforms like Polymarket and Kalshi predicted a Trump victory nearly the whole way, even when polls suggested a toss-up or a slight edge for Harris. As Shayne Coplan, the 26-year-old founder and CEO of Polymarket, wrote on Twitter, “The global truth machine is here, powered by the people.” While probabilities aren’t a perfect gauge of accuracy, prediction markets enjoyed mainstream success.
So, what does it all mean? Crypto isn’t yet an issue Americans care about like immigration or inflation, but it was an undeniable driving force and winner of the 2024 election. The industry will likely have a hand in shaping the economic policy of the next four years. This could range from changing securities regulation that has stood for nearly a century to injecting stablecoins into the monetary system to choosing Gary Gensler’s replacement at the SEC. You might not pay for coffee with Dogecoin anytime soon, but crypto could reshape our infrastructure. Somewhere in Brooklyn, a monkey’s paw is unfurling for Sam Bankman-Fried.
Bitcoin soared above $76,000 ahead of the Federal Reserve’s interest rate decision. The crypto market continued its upward trajectory on Thursday, fueled by Donald Trump’s victory in the 2024 U.S. presidential election. Bitcoin (BTC) climbed 3% to $76,300, while Ethereum (ETH) surged 8% to $2,860. Solana (SOL) and Polkadot (DOT) gained 5% and 3%, respectively. The global crypto market cap rose 2% to $2.68 trillion.
Bitcoin’s Open Interest (OI), the total value of unsettled Bitcoin derivatives contracts, reached a record $45.78 billion, according to data from CoinGlass. “The crypto market has been on fire, with BTC hitting an all-time high of $75k. Notably, BTC has now navigated three election cycles since 2009, each followed by rallies to new highs,” wrote QCP Capital, a crypto trading firm.
Crypto liquidations reached $334 million in the past 24 hours, impacting 105,262 traders. Notably, 62% of these liquidations were short positions. This suggests many traders bet against the market but were caught off guard by the surge.
Bitcoin spot exchange-traded funds (ETFs) recorded significant inflows on Wednesday, marking a notable reversal after three consecutive days of outflows. According to Farside Investors, net inflows surged to $622 million. Fidelity’s Wise Origin Bitcoin Fund (FBTC) led with $300 million, followed by Grayscale’s Bitcoin Mini Trust (BTC), which recorded $109 million, and Bitwise’s Bitcoin ETF (BITB), which added $101 million.
Meanwhile, BlackRock’s iShares Bitcoin Trust (IBIT), which had gone parabolic last week, reported net outflows of $113.3 million. However, the fund set a daily trading volume record, hitting $4.1 billion. “IBIT just had its biggest volume day ever with $4.1 billion traded,” noted Eric Balchunas, a Bloomberg ETF analyst. “That’s more volume than stocks like Berkshire, Netflix, or Visa saw today. It was also up 10%, its second-best day since launching. Some of this will likely convert into inflows.”
Ethereum spot ETFs logged inflows of $52 million on Wednesday. This highlights a growing divergence in institutional investor behavior, with significantly more capital flowing into Bitcoin products than Ethereum.
Crypto-related stocks rallied as well. Coinbase (COIN) jumped 31% to $254, while Robinhood Markets (HOOD) and Marathon Digital Holdings (MARA) followed with gains of 19%. MicroStrategy (MSTR), the largest corporate Bitcoin holder, surged 14% to nearly $257, approaching its all-time high of $260.
Traditional financial markets also hit all-time highs. The Dow Jones Industrial Average jumped 3.4%, marking its best single-day performance since November 2022. The S&P 500 and Nasdaq Composite also hit new peaks, rising 2.3% and 2.6%, respectively.
Investors are gearing up for the Federal Reserve’s interest rate decision later today, where the central bank is widely expected to cut interest rates by 0.25%. This anticipated move has fueled optimism in both traditional and crypto markets.
Trump’s embrace of cryptocurrency during his second presidential campaign marks a significant shift. After dismissing Bitcoin as a scam in 2021, he now sees value in the crypto industry’s influence. His pledge to commute Ross Ulbricht’s sentence has stirred debate. Ulbricht, the founder of Silk Road, became a symbol of the dark web’s intersection with crypto. Commuting his sentence could signal a more lenient approach to crypto-related crimes.
Brian Armstrong’s battle with SEC Chair Gary Gensler over crypto regulations has been a focal point. Armstrong, the CEO of Coinbase, has criticized the SEC’s approach, calling for clearer rules. With Gensler potentially being replaced, the crypto industry hopes for more favorable regulation.
Pro-crypto candidates winning seats in the House and Senate could lead to significant legislative changes. Blockchain legislation might gain traction, impacting everything from securities laws to the use of stablecoins in the monetary system. The influence of the crypto industry on U.S. economic policy following the 2024 election could be profound.
The rise of crypto-powered electoral betting markets like Polymarket and Kalshi reflects a growing interest in decentralized platforms. These markets allow users to bet on election outcomes using cryptocurrencies. While controversial, they offer an alternative to traditional polling methods. As I told Allie yesterday, probabilities aren’t a perfect way to gauge accuracy, but prediction markets certainly enjoyed their mainstream ascendancy.
Bitcoin’s surge above $76,000 following Trump’s election victory shows the strong link between politics and crypto markets. Institutional investors driving significant inflows into Bitcoin ETFs suggest growing confidence in crypto assets. Differences in institutional capital flow between Bitcoin and Ethereum ETFs highlight Bitcoin’s dominance.
BlackRock’s iShares Bitcoin Trust setting daily trading volume records indicates mainstream adoption. MicroStrategy’s stock surge, approaching its all-time high due to Bitcoin holdings, underscores corporate interest in crypto. The impact of the Federal Reserve’s anticipated interest rate cut on crypto markets adds another layer to the current momentum.
In summary, crypto played a key role in the 2024 U.S. presidential election. From influencing voter blocs to impacting market trends, its presence is undeniable. The industry’s future looks promising, with potential changes in regulation and increased institutional adoption. While you might not use Dogecoin for your morning coffee soon, crypto is set to reshape our financial landscape. The crypto market’s upward trajectory, fueled by political developments in 2024, signals a new era. The anticipated Federal Reserve interest rate decision and investor anticipation add to the momentum. Traditional markets hitting all-time highs alongside the crypto rally show a unique alignment of economic forces.
Somewhere in Brooklyn, Sam Bankman-Fried might reflect on how his vision unfolded. The crypto industry’s influence on U.S. economic policy is growing. With the potential replacement of Gary Gensler and a new wave of pro-crypto legislators, the landscape is changing. The upending of nearly a century of securities regulation and the injection of stablecoins into the monetary system are no longer distant possibilities. Crypto’s role as a driving force in the 2024 U.S. presidential election highlights its rising significance. The future holds many uncertainties, but one thing is clear: crypto could reshape our infrastructure in ways we are just beginning to understand.
