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SA crypto experts weigh in on US election implications

Admire Moyo
By Admire Moyo, ITWeb news editor.
Johannesburg, 05 Nov 2024
As the presidential race has tightened, the Bitcoin price has moderated, standing at $68 430 at the time of writing.
As the presidential race has tightened, the Bitcoin price has moderated, standing at $68 430 at the time of writing.

South African crypto-currency players are eagerly waiting for the US election results to see what bearing the outcome will have on the industry.

The 2024 US elections are being held today. Democrat Kamala Harris, the current vice-president, and Republican Donald Trump, the former president, have been locked in a close race for months.

The crypto industry believes should Trump be victorious, the price of Bitcoin, the world’s most popular digital platform, will shoot up, although the run will be short-lived.

Crypto players say a Harris win could see a drop in the price, but it will recover in the short-term.

Christo de Wit, country manager at Luno, says Bitcoin and other digital assets have been volatile, as the price briefly dipped amid broader geopolitical uncertainties, rose and then dipped again.

“Crypto investors initially expected a Trump victory and as odds shrank that crypto-friendly Trump would win, the market retracted.”

De Wit points put that Luno is currently witnessing an uptick in trading volumes. He adds that yesterday, Bitcoin held around $68 500, showing a muted response to the US elections. It is currently trading at R1 217 502 ($68 375) on Luno.

He points out that data from the CF Bitcoin Volatility Index shows a spike in expected volatility after the election, at levels last seen in August, showing potential price swings once results are in. Analysts predict sentiment may shift depending on the election outcome.

“Trump is believed to be more industry-friendly. However, market movements after previous elections have shown the price of crypto rallies no matter who wins, which could point to a significant rally for Bitcoin in about a year if this trend reoccurs.”

Trump’s Bitcoin about-turn

Farzam Ehsani, co-founder and CEO of VALR, comments that for the last seven months, Bitcoin has been trading sideways since it hit an all-time high of $73 600 in March, after climbing from $40 000 at the beginning of 2024.

He notes that many crypto traders have been waiting for the US elections to conclude before taking any big positions, given the uncertainty of the outcome of the election.

“In the last 10 days, though, we saw Bitcoin appreciate to within a few dollars of its previous all-time high, as prediction markets signalled a higher probability of a Trump victory. Trump has been seen to take a much more favourable stance on crypto than Harris,” says Ehsani.

“As the presidential race has tightened, the Bitcoin price has moderated and stands at $68 430 at the time of writing.”

He adds that Trump has spoken at Bitcoin conventions and promised to establish a “national Bitcoin stockpile” if elected president, signalling his now pro-Bitcoin stance − an about-turn from his anti-Bitcoin position when he was president.

“On VALR and other global crypto exchanges, the highest trading volume this year was in late February and March, when the price of Bitcoin rose close to 50% in three weeks. We haven’t seen those types of volumes since then, but volumes are expected to pick up after the election.”

He points out that many are expecting a Trump victory to be more favourable for the crypto industry than a Harris win, given their policy positions.

“However, no matter the short-term volatility post-elections, I anticipate the price of Bitcoin to climb significantly in 2025, given past crypto cycles, particularly with the expectation that structurally high US deficits will continue regardless of the election outcome, and US national debt will continue to soar. This is likely to result in the US dollar weakening against harder forms of value, including Bitcoin.”

‘Exciting six months’

David Porter, GM of AltCoinTrader, says the price of Bitcoin has been gradually increasing since lows in August.

“It [the price] is now consolidating just shy of all-time-highs, waiting for the right stimulus to push the market into full-blown bull territory.”

Like Ehsani, Porter says the general perception in the crypto industry is that a Trump victory would be more positive for crypto prices in the short-term, while a Harris victory may lead to further price consolidation, or even a small slump before the bull market resumes in Q1 2025.

According to Porter, while Bitcoin remains range-bound, trading volumes are fairly muted. “The interesting thing we have noticed is that even though we are approaching all-time highs, we have not yet begun to witness the type of retail hype we have seen in the past.

“It’s almost as if people are unsurprised at Bitcoin’s performance. We think a sustained break above all-time-highs with volume could re-invigorate retail’s interest in the asset class.”

He adds that altcoins are seeing muted trading conditions and most are hovering near their January 2024 lows.

“We typically find that altcoins will follow Bitcoin’s lead and while Bitcoin remains consolidating and range-bound, we don’t expect the scenario to change until Bitcoin gets that stimulus I referred to earlier.

“In my opinion, we are in for a very exciting six months. Those that follow the market notice how it operates according to a four-year cycle aligned to the ‘halving events’. The market has absorbed the supply shock of the Bitcoin halving event.”

Porter adds that the big spot Bitcoin ETFs in the US are buying up lots of the available stock, which will amplify the supply shock and hopefully send the market into price-discovery.

“We are fast approaching that period in the four-year cycle where there are fewer and fewer sellers and many millions of dollars chasing what little is available.”

Market catalyst ahead

Luc Varejes, COO of Ovex, notes Bitcoin has been performing extremely well in the run-up to the US elections and bullish sentiment has clearly been revitalised.

Just last week, he notes, Bitcoin was at $73 620, just below the all-time high. “We have seen record BTC ETF inflows and this ETF product has become one of the most successful in history.

“We have seen an increase in crypto trading volume on our platform, but this has mainly come from institutional players. We still see that retail demand is somewhat lagging.”

Varejes believes there are many indicators, such as Bitcoin Google search trends, that show retail has not yet come back into the fold, which could indicate the industry is still in the early stages of a bull market.

“In my personal opinion, the US elections will have a large effect on very short-term prices. In the immediate aftermath, we could see a sharp price movement up or down, if Trump or Harris are declared the victors, respectively.

“Bitcoin and broader market prices almost seem correlated to the odds of a Trump win. As soon as the prediction odds and polls indicate a Trump victory, we see better market performance. With all of this being said, I believe that in the short-term, the winner will be less relevant and the election itself will serve as a catalyst to markets.

“A Trump win could act as an accelerant, but it is likely that the overall trend will continue regardless of the outcome. Markets will be given more certainty and volatility will stabilise. This should not be seen as advice.”

He adds that many other crypto-currency categories have been performing in this run-up, such as AI and Memecoins.

“However, if we look at the broader altcoin market, we have seen that most altcoin price performance has been lagging and underperforming in comparison to Bitcoin. This is clearly illustrated by the Bitcoin Dominance chart, which was 53%, six months ago, and is now hovering around the 60.5% mark.

“Historically, altcoin price performance tends to lag Bitcoin as investors take Bitcoin profits and cycle into Altcoins, but we will need to wait and see if this trend continues. 

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