Cryptocurrencies Surge as Political Winds Shift and Central Bank Meetings Loom
Cryptocurrencies started the final week of July on an upswing, driven by a confluence of political developments over the weekend and anticipation of upcoming central bank meetings. Bitcoin, the dominant cryptocurrency, rose by 2% to reach $69,640, while Ethereum, the second-largest cryptocurrency, experienced a 3% gain, reaching $3,382.15. This upward trend comes after a week of relative stagnation for Bitcoin and a significant drop for Ethereum, suggesting a return of investor confidence. Investors are intently focused on the upcoming meetings of the Federal Reserve, Bank of Japan, and Bank of England, with particular attention on Federal Reserve Chair Jerome Powell‘s statements regarding potential interest rate cuts in September.
Key Takeaways:
- Cryptocurrencies, including Bitcoin and Ethereum, saw a surge to begin the final week of July.
- Political developments over the weekend, particularly former President Trump’s speech at the Bitcoin Conference and Senator Lummis’ proposed bitcoin reserve bill, have fueled market activity.
- The Biden administration’s outreach to crypto industry representatives, particularly from Vice President Kamala Harris’ team, signals a potential shift in policy toward the sector.
- Bipartisan support for crypto continues to grow in Congress, with House Democrats advocating for a pro-crypto stance within the party.
- The cryptocurrency sector, particularly Bitcoin, is becoming increasingly relevant in the upcoming US presidential election, with the Trump team targeting the growing crypto vote.
The Trump Effect and the Bitcoin Reserve
Former President Donald Trump delivered a highly anticipated speech at the Bitcoin Conference in Nashville, Tennessee, on July 22, 2023. His speech focused on criticizing the Democratic party‘s stance on crypto and calling for a more favorable policy environment for the industry. Trump slammed Senator Elizabeth Warren (D-Mass.), Securities and Exchange Commission Chair Gary Gensler, and the Biden administration for their perceived hostility towards the cryptocurrency sector. He argued that their lack of clear regulations has stifled the industry’s growth and blamed them for the current "uncertainty" surrounding crypto.
Trump went on to pledge that were he to be re-elected, he would implement a National Strategic Bitcoin Reserve, holding the entire 210,000 bitcoins currently owned by the US government. He also declared his intention to replace Gary Gensler as SEC Chair "on day one" of his second term, drawing a thunderous applause from the audience.
These remarks, while potentially politically charged, have sparked debate within the crypto community. Some see them as a positive sign of support for Bitcoin as a strategic asset, while others remain skeptical of their practical implicability.
The same day, Senator Cynthia Lummis (R-Wyoming), known for her vocal support of Bitcoin, announced her plan to introduce a bill that would establish a 1 million-unit bitcoin purchase program. This program aims to acquire roughly 5% of the total Bitcoin supply over a specified period, effectively creating a substantial Bitcoin reserve for the US government.
While both Trump’s pronouncements and Lummis’ bill have generated excitement, Noelle Acheson, economist and author of the "Crypto is Macro Now" newsletter, expressed reservations about their long-term impact. She pointed out that both proposals face significant hurdles in getting through Congress.
“Both Trump’s comments and Lummis’ bill will be really hard to get through Congress," Acheson said. "More overlooked but with a higher potential impact is the news that [Vice President Kamala Harris’] team is reaching out to crypto industry representatives."
A Shift in Democratic Policy?
Acheson’s statement highlights a potentially more impactful development: the initiation of outreach from Vice President Kamala Harris’ team to representatives from the crypto industry. This move, reported by the Financial Times, marks a significant shift in the Democratic party’s stance toward the sector, which has been largely characterized by skepticism and hostility.
The Financial Times article suggests that Harris’ advisors are engaging with crypto companies in an effort to "reset" relations between the Democratic party and a sector that has increasingly become a significant backer of Donald Trump. This shift in strategy signals a possible move away from the party’s more traditional stance on crypto, which has been heavily influenced by figures like Senator Warren, who has been a steadfast critic of the industry.
The potential for a more friendly political environment for crypto is further bolstered by the announcement that over a dozen House Democrats and several congressional candidates signed a letter to the Democratic National Committee. The letter urges the party to adopt a more "forward-looking approach" to crypto by incorporating "pro-digital asset language" into its platform. It also calls for the appointment of an SEC Chair who would foster innovation within the crypto space. This initiative signifies a growing demand for a more positive approach to crypto within the Democratic party, particularly from those who are seeking elected office.
The Future of Crypto in US Politics
The events of the past week underscore the growing significance of the cryptocurrency industry within US politics. The Trump team is leveraging the growing crypto vote, a demographic increasingly receptive to his message, as a potential key to securing victory in the upcoming presidential election.
However, it’s crucial to note that the crypto industry enjoys growing bipartisan support in Congress. While Democratic figures like Senator Warren have been fierce critics, a vocal group within the party is advocating for a more accommodating stance toward crypto. This growing bipartisan support, coupled with the potential for a shift in Democratic policy under the Biden administration, offers a glimmer of hope for a more stable and conducive regulatory environment for the industry.
The future of crypto in the US political landscape remains uncertain. However, the ongoing discourse, the growing demand for change from within the Democratic party, and the increasing relevance of the crypto vote in the upcoming election suggest that the industry’s influence will likely only continue to grow in the years to come.
