Four predictions: How will the US election affect the future of BTC and digital assets?

Author: Calaxy CEO Solo Ceesay, CoinTelegraph; Compiled by: Baishui, Golden Finance

BTC first emerged more than three election cycles ago. However, the 2024 US presidential election is the first time that Bitcoin (and cryptocurrencies more broadly) have been considered a key electoral issue. Fanatic advocates of the ideals set out in Satoshi Nakamoto’s white paper have become an influential group among single-issue voters, and they have remained committed to the cause despite the impact of the bear market and broader industry turmoil in recent years (such as the collapse of once-lauded cryptocurrency exchange FTX). Recently, the tide has turned for the industry and its supporters, with Bitcoin prices remaining stable and institutions such as BlackRock, the world’s largest asset manager, claiming that Bitcoin is a store of value for this generation. As the campaign heats up, the question now remains: What role will this modern form of money play in the future of the world’s most powerful economy?

According to the Federal Reserve, by 2024, the original purchasing power of the US dollar will only be 3%, which has led many developing economies to consider trading in currencies other than the US dollar. There are also concerns that the current monetary policy decisions made to avoid a recession could actually lead to hyperinflation in the dollar and a recession. In recent years, the economy has vacillated between a period of explosive growth catalyzed by loose monetary policy and the brink of economic collapse exacerbated by the impending debt crisis. The volatility has been further exacerbated by the growing geopolitical tensions and conflicts in the past few years.

This chaos has led to a widening gap between the rich and the poor, with the wealth of the upper class multiplying and the wealth of the middle class decreasing. Since its emergence, Bitcoin has been seen by many as a potential hedge for the middle class against economic fluctuations. It is hoped that it will be an inflation-proof asset that can bring economic independence to the declining middle class, but the US dollar remains the backbone of the global economy. Although the purchasing power of the US dollar is declining, it still retains the trust of many retail investors.

Today, the United States finds itself facing an unprecedented dilemma: on the one hand, the depreciation of the US dollar, and on the other hand, Bitcoin has the potential to solve many outstanding financial problems facing the middle class. How the latter is discussed and resolved will have the biggest impact on what the world’s most important economy looks like 25 years from now.

With that backdrop, here are four bold predictions for how this year’s election will shape the future of Bitcoin and digital assets in the United States.

Gary Gensler could be out no matter who wins

Since taking over as chairman of the SEC, Gary Gensler has made few friends in the cryptocurrency community. While he’s racked up some notable victories, his approach to law enforcement and regulation has also suffered defeat in the courts. Former President Donald Trump promised to “fire” Gensler if he was elected, but that never really happened. Traditionally, SEC chairs resign if there’s a change in the White House during their term. If we see Vice President Kamala Harris win, it wouldn’t be surprising if her administration takes a similar stance to her opponent’s in an attempt to win favor with the industry. Change is in the air.

A Harris Victory Could Benefit Bitcoin, While a Trump Victory Could Benefit Ethereum

Bitcoin largely acts as a commodity, with inflows occurring when U.S. interest rates are lower and capital becomes cheaper. Given that a Harris administration is likely to continue current monetary policy and increase government spending, cryptocurrency markets should remain stable or even climb. In contrast, a Trump victory would mean incentives for cryptocurrency companies to incubate in the U.S. — something the country has been lacking. Under a Trump administration, a clearer regulatory framework would be in place, leading to more opportunities for the decentralized finance (DeFi) space. Given that the DeFi ecosystem is largely built on Ethereum, a Trump administration could benefit it and other layer 1 protocols.

Harris Administration Likely to Introduce Crypto Capital Gains Tax

While an electoral victory would allow Harris to set her own policy agenda, she served for three and a half years in an administration that considered imposing a capital gains tax on cryptocurrencies.Given the amount of capital that will soon flow into the asset class, it’s hard to imagine that the U.S. government won’t try to get a piece of the action as crypto integrates into traditional finance.Given the amount of capital that will soon flow into the asset class, it’s hard to imagine that the U.S. government won’t try to get a piece of the action as crypto integrates into traditional finance.

Trump to Release Formal Plan on Bitcoin and Digital Assets Before Election

While Harris has been largely silent on digital assets on the campaign trail — only mentioning them, along with other emerging technologies, in passing — Trump has been formally courting the “crypto vote.” The former president became the first and only president to attend the Bitcoin 2024 Nashville event this summer, where he famously stated that Bitcoin’s future is in America and that he would “keep Elizabeth Warren and her mob away from your Bitcoin.” He also launched his own DeFi project, World Liberty Financial. If a formal policy proposal on cryptocurrencies and digital assets is to materialize before the election, it will likely come from the Trump campaign. Change almost always takes much longer than expected and happens differently than planned. Bitcoin is no exception. The mission and message behind Bitcoin are perhaps the most powerful liberating force signal in centuries. However, if the core principles of Bitcoin and cryptocurrencies are realized, the institutions that hold power have the most to lose.