Trump assassination, Biden's withdrawal, these two events related to the US presidential election are becoming a catalyst for the rebound in the cryptocurrency market. Bitcoin temporarily broke out of its slump, reaching a high of over $67,000, with a weekly increase of over 10%. Meme coins related to the two individuals are also emerging.

Donald Trump, the self-proclaimed "crypto president," received campaign funds in the form of cryptocurrencies and gained support from his own assassination and his opponent's withdrawal. His campaign trends have now become a "barometer" for the cryptocurrency market. Trump is also seizing the opportunity to garner votes from the crypto community.

According to The Wall Street Journal, Trump is scheduled to speak at the 2024 Bitcoin conference at the end of July and will hold a fundraising event before that. Teong Hng, CEO of Satori Research, predicts that Bitcoin may soon return to its historical high, stating that "a strong rebound is expected by the end of the year, and Trump's election will be a symbol of it."

However, Ethereum co-founder Vitalik Buterin has voiced a different opinion. On July 18, he wrote an article opposing making political voting choices based on "support for cryptocurrencies," stating that a candidate's current crypto-friendly stance does not guarantee the same stance five years later.

How long can the "Trump trade" in the cryptocurrency market continue?

Trump Increases "Crypto-Friendly" Stance

On July 21, Biden announced in an "open letter" that he would no longer seek re-election and withdraw from the presidential election. Soon after, the voices supporting Trump surged unprecedentedly. Coupled with the high-profile image brought about by the assassination incident, Trump's chances of winning increased significantly. Data from the decentralized prediction platform Polymarket shows that the support rate for Republican candidate Trump to win the 2024 election is as high as 61%, far exceeding the second-highest support rate for Kamala Harris (37%).

Investors on Wall Street believe that there is a high possibility of Trump returning to the presidency. Industries that may benefit from Trump's election, such as the cryptocurrency, fossil energy, and banking industries, have seen a market trend called the "Trump trade."

The most uproarious among them is the cryptocurrency industry. Not only is the recent trend of Bitcoin closely related to Trump's candidacy, but Trump's actions have also attracted influential figures in the crypto community to publicly express their support for his crypto-friendly attitude. This includes Elon Musk, CEO of Tesla, who previously "shilled" Dogecoin, changing his profile picture to the consensus "laser eyes" in the crypto community. Additionally, prominent figures in the crypto asset venture capital industry, such as Marc Andreessen, founder of a16z, and Ryan Selkis, founder of Messari, have also changed their profile pictures to express support for Trump's crypto-friendly stance. Subsequently, the token DMAGA, associated with the "laser eyes" meme culture, saw its value increase by over 50 times within hours, with its market value surpassing $60 million.

KOLs in the cryptocurrency industry changing their profile pictures to "laser eyes"

How deep is Trump's relationship with cryptocurrency?

A report from The Wall Street Journal citing the latest data from the Federal Election Commission (FEC) shows that of the approximately $331 million raised by Trump's campaign team in the last quarter, about $3 million came from cryptocurrencies, including BTC, ETH, and Dogecoin.

Recently, Trump has once again signaled his crypto-friendly stance. According to overseas media reports, he is scheduled to speak at the 2024 Bitcoin conference at the end of July and will hold a fundraising event before that.

In addition, in an interview with Bloomberg, Trump also plans to release a fourth NFT series, as his previous NFT series was "very successful," selling out within a day. He stated, "I plan to release a new series because this is what many people are expecting."

Trump, who calls himself the "crypto president," has deeply tied his campaign to the cryptocurrency market. Teong Hng, CEO of Satori Research, pointed out that active trading in the over-the-counter options market indicates that Bitcoin may soon return to its historical high. He predicts that "a strong rebound is expected by the end of the year, and Trump's election will be a symbol of it."

Stephane Ouellette, CEO of FRNT Financial, also expressed a similar view, believing that the likelihood of Republican candidate Trump being elected president is increasing, which is driving the rise of the Bitcoin and other cryptocurrency markets. This is because if the Trump administration is re-elected, it will create a more favorable regulatory environment for the cryptocurrency industry.

Ethereum Co-Founder Vitalik Voices Dissent

Now, whether Trump's election can bring about another upturn in the crypto market has become a focus of attention in the crypto community. However, amidst the fervent support, a "dissenting voice" has emerged.

On July 18, Vitalik Buterin, co-founder of the Ethereum network, wrote an article expressing his opposition to making political voting choices based on support for cryptocurrencies, stating that a candidate's current crypto-friendly stance does not guarantee the same stance five years later.

Vitalik opposes making political voting choices based on support for cryptocurrencies

In the article, Vitalik pointedly wrote, "If you find a politician who is friendly to cryptocurrencies, one thing you can do is to look at their views on cryptocurrencies five years ago."

This is essentially a "dig" at Trump from five years ago when he was the President of the United States but held a negative view of crypto assets.

In 2019, Trump stated on Twitter, "I am not a fan of Bitcoin and other cryptocurrencies. They are not money, and their value is highly volatile and based on thin air. Unregulated crypto assets can facilitate unlawful behavior, including drug trade and other illegal activities."

In 2021, Trump stated in an interview with Fox Business that Bitcoin is a scam against the US dollar, and he would not be surprised if it fell below $6,000.

Five years later, Trump has contradicted his previous statements, adopting a crypto-friendly stance and criticizing the Biden administration's tough stance on crypto assets.

Adam Cochran, a partner at Cinneamhain Ventures, also believes that the promises made by Trump to win votes are highly unreliable. He pointed out that "Trump has a decades-long history of flip-flopping" and "selling out others for his own benefit." An analysis from the fact-checking website PolitiFact stated that of the 102 promises made by Trump during the 2016 presidential campaign, more than half have been broken by him.

Some opinions suggest that even if Trump is re-elected and fulfills his promises, the cryptocurrency market has become increasingly linked to the US stock market. This means that the decisions of the Federal Reserve will impact the market. So, how much influence can Trump's election as US president have on the Fed's decisions?

In July of this year, on the eve of the first presidential debate, Trump stated in a media interview that he would not allow Powell to serve as the Fed chairman for a third term but would let him complete his second term. At the same time, he stated that the Fed should avoid cutting interest rates before the November election to avoid boosting the economy during Biden's term.

The Republican Party, represented by Trump, tends to favor loose financial policies. During his term, Trump repeatedly criticized the Fed, demanding that Fed Chairman Powell stop raising interest rates and immediately cut rates. Recently, during the campaign, Trump also presented his own economic policies, emphasizing that "Trump economics = low interest rates + low tax rates."

In reality, the Federal Reserve is an independent entity within the US government system, emphasizing that it is not influenced by politics. The US president does not have the power to appoint or dismiss the Fed chairman, and government policies largely depend on Congress.

According to data from Wolfe Research, the most significant policy changes in the past 15 years occurred when both houses of Congress and the White House were controlled by the same party. If the Republicans do not control both houses, the Democrats can set "roadblocks" in Trump's agenda.

How long will Trump's "tie" with cryptocurrency last? In the short term, Trump's stance, actions, and voter support rate will continue to influence the cryptocurrency market until the results of the US election are announced in November. After the "shoe drops" in the election, the "Trump trade" is likely to weaken.

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