- The 2024 US presidential election is influencing global markets, with crypto voters favoring Donald Trump.
- This year marks the most crypto-influenced election and it will likely have a big impact on the market.
- The weak jobs report worries the market, but experts still believe in a rate cut at the next FOMC meeting.
Is the crypto market heading towards its most decisive week in 2024?
As we near the end of an overall positive calendar year, crypto investors are preparing for perhaps the most decisive and important week of 2024.
In the most crypto-influenced election of all time, current Vice President Kamala Harris leads by a single percentage point over former President Donald Trump. The statistical tie predicted by a Forbes poll underscores the slim margins in an election where positions on crypto policy and the digital economy have become defining issues for many voters.
Up to 16% of voters may still change their minds on Election Day, meaning the outcome remains open for both sides.
The cryptocurrency community often favors Trump due to his pro-crypto stance and his desire to use stablecoins pegged to the US dollar as a tool to consolidate the greenback’s influence in foreign trade. However, Kamala Harris is also taking a crypto-friendly approach, even announcing a crypto framework to protect Black voters.
However, the real problem for Democrats in breaking the crypto barrier between voters might lie elsewhere. The Biden administration’s SEC Chairman – Gary Gensler – has faced widespread criticism for his reactionary approach to regulating cryptocurrencies. Even other members of the SEC have openly criticized the chairman for his altcoin approach.
Donald Trump openly stated in July that one of his first actions as president would be to fire Gary Gensler, although Gensler would likely resign after the election. As for Democrats, some of their major donors, like Mark Cuban, are pushing for Gensler’s immediate replacement as soon as Harris – hypothetically – takes office.
Pre-election market volatility
Digital assets are affected by election estimates. Most notably, Dogecoin became one of the most affected by politics after multi-billionaire Elon Musk mentioned the memecoin during a few pro-Trump presidential rallies.
Analysts believe that a Trump victory could catapult Bitcoin to a new all-time high – citing that the Republican is likely to ease BTC mining regulation in the country. In September, an analysis from Bernstein said a Trump victory could propel BTC above $80,000.
In a heavily crypto-backed election, market volatility is expected to peak as investors prepare for possible regulatory changes.
New decision on interest rates
As if the US elections were not enough to sow uncertainty among crypto investors, the Federal Reserve will hold another FOMC meeting just 2 days after the election.
On November 6 and 7, Jerome Powell and other presidents will announce the FED’s decision regarding the evolution of the new US interest rate. This key meeting comes after the first de facto interest rate cut in years (-0.5%) – and risk asset investors are watching the situation closely to see if the US will continue to cut rates.
Analysts predict a further decline of 0.25% at the next meeting. However, an extremely weak US jobs report on November 1 reinforced the outlook that inflation and unemployment are still comfortably under control ahead of a further interest rate cut.
However, it is important to note that the low number of new jobs created in October coincides with a period of instability following hurricanes and major labor strikes. In all likelihood, experts still believe that an interest rate cut of 0.25% will take place on November 7.
The election result, coupled with the Federal Reserve’s impending interest rate decision, has cryptocurrency investors on alert as they anticipate major market changes. As the candidates take divergent stances on digital assets and regulation, the winner could set the tone for crypto’s role in the U.S. economy. If interest rates decline, it could open the door for a recovery in risky assets like crypto. But if rates hold, the market could see more cautious movements.
