DeutschAs expected, the US elections were followed worldwide with great attention. Not only were the citizens in an uproar for months. The most expensive election campaign of all time, however, kept politics and business worldwide in suspense. Although this did not have a dramatic impact on stock prices and indices early on, there were more movements in the last days before the counting began. Political scientists repeatedly warned that data from surveys could be misleading. Already during Donald Trump’s first candidacy, hardly anyone had expected a victory. And so, this year, too, it became a much closer race for the presidency, from which the Democrat Joe Biden ultimately emerged as the winner. And this gave the developments, especially among many crypto fans, additional attention.
Will Biden Strike a Gentler Tone on Crypto?
Donald Trump (and, with few exceptions, the Republican Party as a whole) has been a critic of digital currencies for years. They see the emergence of the new currencies of the digital world as a threat to the traditional financial system. And internationally, few countries have so far dealt with forward-looking regulation of the crypto market. The social media giant Facebook can sing a sad song about how vehemently many states and central banks resist competition from the digital sector in connection with its planned stablecoin Libra. With Joe Biden’s entry into the White House – so the hope within the crypto community – this could now gradually change.
No one expects hasty miracles, because the years of resistance to Bitcoin and Co. will certainly not be abandoned immediately after taking office. On the other hand, there are good and important signals that make the crypto sector sit up and take notice. These sound quite hopeful.
Biden is more Objective towards Digital Currencies than Trump
What exactly is it about? It is not only Biden’s own statements from past times regarding the opportunities and risks of innovative blockchain technology and cryptocurrencies that suggest a certain change. Rather, it is the first deeds, although Trump has so far refused to hand over the business to his elected successor and still sees himself as in the role of the clear winner. Biden’s first appointments to his “transition team” are the occasion for the first – for the time being restrained – reactions in the community.
Ex-CTFC Chief to Help Realize Biden’s Financial Ideas
Most recently, Biden announced that he has appointed Gary Gensler to his so-called transition team. The former chairman of the Commodity Futures Trading Commission (CFTC) has repeatedly expressed openness to the crypto sector in the past. Gensler enjoys an excellent reputation as an expert on the global financial market. His inclusion in the “Biden-Harris transition team” sounds pleasing. Under Barack Obama, the expert was CFTC chairman until 2014 and was considered a strict regulator in the area of financial derivatives.
New President Has Long Advocated for Clear Rules
Even today, he is firmly convinced that the crypto market needs secure regulation in order to remain on a growth path. Gensler was and is particularly concerned with protecting investors from market manipulation. In 2018, Gensler also stated that, in his opinion, ICOs are securities, which is why they should be under the control of the SEC. A clear direction from the Biden team can set important courses. Especially since: The advisor to the 46th US President is already in a leading advisory function for MIT Media Lab or, more precisely, the well-known Digital Currency Initiative. Gensler is therefore taking on the position of a promoter of the industry when it comes to technological developments in blockchain and other crypto concepts.
| One of the pressing questions:
Are the USA opening up more to the crypto market? Possible optimization of opportunities for products such as ETFs (exchange-traded funds) on Bitcoin, Ethereum and Co. |
Bitcoin Rose as the Election Campaign Was on the Home Stretch
Apart from this good news, it was striking how optimistic the Bitcoin movement reacted even before the start of the last hot phase of the election campaign. Within a single month, the leading currency of the crypto market secured a plus of sometimes a good 30 percent. For many experts, despite the hope for movement on the topic of “digital currencies and blockchain”, one thing is certain anyway: Interest in coins and tokens is growing steadily. This is generally reflected in the efforts of many states to finally launch projects with their own tests on digital central bank money (CBDC).
Possible Effects of Higher Taxes Only Partially Foreseeable
A “problem” that many industry experts see in connection with the change of power in the USA is of a tax nature. Not only convinced Republicans expect Joe Biden to make corrections to some taxes. Concerns are increasing, particularly in the corporate sector. But the issue of wealth tax also plays a role. These fears of investors could lead to an increase in demand for Bitcoin as the leading cryptocurrency on the one hand and promising altcoins such as Ripples XRP or Ethereum on the other. And faster than before. To be fair: Even in the event of a re-election of the controversial President Donald Trump, market observers expected continued growth in the crypto sector. However, in a more moderate form than many market participants now expect from Biden’s upcoming appointment.
Crypto Market Observes State Anti-Corona Measures in the USA
From the perspective of the crypto world, new negotiations on rescue packages for the corona-stricken economy could also prove positive in the coming weeks. Joe Biden announced further aid early on in this regard. Provided, of course, that Democrats and Republicans can agree on measures as quickly as possible. Only last October, the US Congress wanted to launch a package with a total volume of 2.2 trillion US dollars. Of course, the Republican-dominated Senate did not give the necessary approval during the election campaign. After the White House is re-staffed, a lot could happen.
Relaxation of the US Economy could Fuel Crypto Interest
If there is further financial aid – especially support in the tax sector – this can quickly become an important engine for the US economy. Although it has recovered in recent months, additional momentum would still be a relief for both companies and private households. This could mean that investors will be more willing to spend money. The area of cryptocurrencies could also benefit from this. Above all, Bitcoin. Because more and more normal investors are discovering coins and tokens despite the higher speculation risks compared to classic asset classes such as stocks.
Interesting at this point:
Numerous analyses in recent months have referred to correlations between the stock market, indices and the Bitcoin price. Digital currencies can also score points here, especially with a view to continuing rising inflation risks, should the pandemic remain a daily companion for an indefinite period of time.
A Too Strong Dollar Can Become a Crypto Obstacle
On the side of possible negative influences in connection with the first activities of the Biden government, a resurgence of the US dollar could stand for crypto investors. If measures are taken, this could help the recently weak dollar to get back on its feet. According to all experience, this puts a strain on Bitcoin, which in turn would influence the crypto market as a whole. The example of the European common currency, the euro, at any rate showed how currencies can be affected by functioning interventions in the crisis. For investors in the USA, this could mean that those who invest quickly and find the right time to exit could record high returns through rising prices on the crypto market due to an economic upswing. At least until the dollar catches up and renewed upward pressure threatens digital currencies.
An uncertainty factor for the coming time, on the other hand, is the threat of tax increases, which many Biden opponents expect. While many analysts predict a further recovery of the stock market due to clear conditions in US politics and thus parallel movements in stock prices and BTC, higher taxes could possibly cause a downward trend on the stock exchanges.
The First Developments Can Set the Direction for Crypto Trends
What is still missing from future crypto policy despite the political change is the clear direction regarding the regulation of digital assets. However, Gary Gensler’s participation in Biden’s team gives justified hope that the USA will finally pursue a clear plan. However, it will probably take a while before the United States takes a stronger example from countries like China or Switzerland. The necessary consequence would be to recognize the opportunities of blockchain and digital currencies, instead of primarily focusing on risks. Real security must be put on the path by first ideas for more acceptance of cryptocurrencies and systems. Biden has four years to find such a path with his experts.
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