Could the 2024 elections transform the crypto landscape?
As Election Day approaches, the crypto market is on edge as the potential outcomes of altcoins, meme coins and Bitcoin hang in the balance. Donald Trump and Vice President Kamala Harris both represent avenues divergent policies regarding cryptocurrency regulation, leaving many investors wondering: which outcome will benefit their portfolios the most?
Trump and Harris: where do they stand on crypto?
Donald Trump has presented himself as a pro-crypto candidate, advocating for policies such as adding Bitcoin as a strategic reserve – much like how the United States holds gold – and pushing for “light” regulation. However, it is worth noting Trump’s recent change of heart; just a few years ago he called crypto a scam.
Meanwhile, the Biden-Harris administration has been widely seen as anti-crypto, with several industry insiders noting that Harris has yet to express a position that distances her from the skepticism of the current administration. That fueled speculation that a Harris victory could continue the intense regulatory scrutiny the industry has been subjected to in recent years.
The Market’s Message: Predicting Election Results
Fortune’s recent analysis shows that stock markets are hinting at a possible Kamala Harris victory, which could imply a continuation of the Biden administration’s policies. However, it’s not a given: Polls show a close race and historical trends suggest Trump’s chances are growing, which could radically reshape market expectations.
In previous election cycles, positive market performance in the three months leading up to Election Day has generally favored the ruling party. With the market hitting record highs since Harris entered the race, history suggests the Democratic camp may have an advantage. Yet Trump’s favorability has seen an uptick recently, demonstrating how quickly dynamics can change.
Altcoins, Meme Coins and the “Trump Trade”
The stakes for altcoins and meme coins are higher than ever. Many analysts suggest that if Trump wins, we could see a shift from meme coins to utility-focused altcoins as regulatory clarity improves and investors feel more confident. Sectors traditionally associated with the Republican Party – such as materials and defensive stocks – could benefit from possible deregulation.
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Conversely, a Harris victory could keep coins in play, as uncertainty over regulatory treatment could steer investors toward lower-stakes speculative plays. The contrasting policy approaches between Trump and Harris indicate that the next administration could have a considerable impact on the performance of different crypto sectors.
How investors prepare
Faced with the magnitude of the stakes, many traders are setting up short and long positions to protect themselves against the election results. Here is a common approach that many take:
- If markets recover before the election: A short position could be advantageous, as a “buy the rumor, sell the news” scenario could follow the election results. Bitcoin resistance is currently around $71,500, where some traders plan to open a 3x to 4x short position with tight stop losses.
- If markets decline before the election: In this case, traders could prepare for a long position with 3x to 4x leverage, especially if Bitcoin sees a decline to the $66,000 range, anticipating a market rebound if Trump gets a favorable result.
Altcoins to watch after the election
Regardless of who wins, investors are gearing up to buy strong altcoins based on fundamentals. If Trump wins and regulatory clarity improves, we could see coins like Solana, Cardano, Polygon, Filecoin, and Near Protocol rebound. Each of these projects has been flagged by the SEC, suggesting they may be undervalued due to regulatory concerns rather than intrinsic issues. With clarity, these projects could rebound strongly.
For those planning to invest long in altcoins, optimal entry points could come after Bitcoin’s dominance breaks a significant trendline. Currently, Bitcoin has been on an upward trend for months, so altcoins may not see major inflows until Bitcoin’s dominance eases – a trend many analysts anticipate for late December or early March.
A strategic wait-and-watch approach
With the November 5 results likely to have a profound effect on the crypto market, remaining flexible is essential. Rather than jumping in with both feet, many investors are cost averaging and closely monitoring the market for post-election opportunities. There is a bullish scenario for Bitcoin and some altcoins if Trump wins, and a potentially bearish outlook if Harris takes the lead.
In the coming months, tax policy for 2025 could also play a role, with many financial advisors already discussing tax mitigation strategies, depending on the outcome.
Final Thoughts
As the elections approach, uncertainty reigns. For crypto investors, now is the time to hedge their positions and prepare to pivot based on the November 5 results. Whether Trump’s pro-crypto stance or Harris’ more regimented approach prevails, decisions made today could shape portfolios for months to come.
