America’s Aspirations of Becoming the Crypto Hub of the World
The US presidential election is perhaps the most keenly watched event in the world every four years. It's the proving ground for the future most influential political figure on the globe. It's a pivotal moment for the financial markets as well because investors and traders are positioning themselves in accordance with the fiscal policy of the new office. For the first time in history, both parties' focus is on something other than Wall Street – cryptocurrencies.
Election Effects on the Economy
Every four years, the usually unassuming November becomes a month filled with political tension as the United States get ready to vote for the country's president. It's a notoriously high stakes moment in the western hemisphere as the two major political parties clash for the presidency – the Republicans and the Democrats.
The combination of fiscal policy by the government and monetary policy by the Fed comprises the economic policy of the country. Based on it, investors make decisions that can either contribute to the strength of the equities market or detract from it.
Historically though, there has been little correlation between the political alignment of the president and the economy's performance metrics. While there is increased volatility in markets during such crucial, high stakes moments as presidential elections, they cause few long-term economic effects that cannot be attributed to more impactful market-related news.
The major factor that paints the US on a global scale is its stock market, often represented by the S&P 500 (NYSE: SPX). While it can be affected by fiscal policies enacted by presidents, the political alignment of the latter seldom matters because it tends to grow with time regardless.
The Economic Backdrop of the 2024 Election
There is a reason that both democrats and republicans are fixated on the stock market. The US is home to the most publicly traded companies of any sovereign in the world. Their superpower is their superior economic output. It's only rational that any newly elected president would want to enact policies that support the private sector. Citing stock market prosperity as a benchmark of a flourishing economy is a very easily understandable concept for many voters.
But it's not just about making the economy look healthy to secure a second term. Senators, House Representatives and president elects all have skin in the game. Congresspeople can legally own stock in companies affected directly by legislation they propose and help pass. They support those companies because they, alongside the others mentioned, receive exorbitant amounts of money in the form of campaign contributions from political action committees (PACs).
The largest contributors in previous elections have been the real estate, stock market and banking sectors to name a few. For example, Wall Street donated a record $2 billion in an attempt to influence the 2016 presidential election. Bottom line is – there is money to be had from the stock market, so lawmakers' fixation on it is not coincidental.
Adding Crypto to the Mix
The only difference in the upcoming election is cryptocurrency. It happens to be the newest player in this game and just like before, lawmakers have tons to gain from having its agenda pushed. The White House has avoided taking a definitive stance on digital assets such as cryptocurrencies for a long time, partly because it's a hot topic that many people (voters and politicians alike) are still on the fence about. And no president would like to jeopardize their term by sitting on a live grenade.
That hasn't stopped the legislative branch of the American government from doing precisely that. The US Congress is polarized on the topic – nearly all republicans are supportive of crypto, while nearly all democrats are against it. Surprisingly though, up until the last few years cryptocurrency policy was spotty, if at all present, in political discourse. Fifteen years have passed since the invention of the first blockchain technology with Bitcoin, but lawmakers are only now beginning to pay attention to it.
This could be explained by several watershed events in the crypto space following the inauguration of the sitting president in 2020. At that time, crypto was still a rather small industry, despite boasting a $400,000 billion market capitalization. Just a year after that, it sextupled in size to reach a massive $2.8 trillion in value, coinciding with Bitcoin's colossal price jump.
The hype surrounding the digital asset field subsided when it all rapidly plummeted afterwards. Nearing the election year, it started picking up speed once again. This time, Bitcoin broke its all-time high, signaling reignited interest in the field.
Even before that, Congress and the Securities and Exchange Commission (SEC) tried to exert control over the field. This is only natural as the decentralized financial system is a threat to the banking system, which is the 7th largest lobby in the US. Recently, pro-crypto SuperPACs have amassed hundreds of millions of dollars, signaling the increasing lobbying power of the crypto sphere in Congress and especially during elections.
The largest money managers in the country will also not pass on the opportunity to get a piece of the crypto profits. Despite pushback from the SEC Chair Gary Gensler, the original eleven Bitcoin ETFs were approved in a monumental victory for the crypto space.
This not only meant that trillions of investor dollars now had exposure to the crypto industry in a regulated way, but it also pulled crypto closer into the arms of regulators.
As for the executive branch of the government – both Democrats and Republicans could no longer stay silent about the largest financial and technological innovation in possibly decades. Crypto became a differentiating factor between demographic groups, meaning that a stance on it could either repel or attract the voters necessary to win the presidential race.
Despite his initial skepticism towards crypto, Donald Trump has had a change of heart, even selling NFTs (non-fungible tokens, a form of digital art) to finance his campaigning. In his most recent address he proclaimed he would safeguard the cryptocurrency market and retain it on US soil, so as to avoid this technology and its future from flying right into the arms of rival nations such as Russia or China. President Biden's administration on the other hand has suppressed pro-crypto legislation but has opened the Democrat's campaign up to crypto donations, potentially warming up to the innovation.
Adding to that, the US is no stranger to crypto, being the number one sovereign in the world in terms of Bitcoin holdings. Eight of the ten public companies with largest Bitcoin holdings are in the US, and so are six of the ten asset management companies. This comes as no surprise as Texas had become a hotbed of Bitcoin miners, having moved shop after China banned crypto mining in 2021.
It's abundantly clear that business and the judicial arm of the American government are gliding in a direction favoring crypto.
The question now is, if the most powerful political figure in the world pivots towards mass adoption of cryptocurrency in one of the strongest economies in the world, how would that affect Bitcoin's price? 
Price targets
- ARK Invest's Cathie Wood anticipates a potential $1 million price tag per Bitcoin by 2030.
- Bernstein are forecasting the same target by 2033 - $1 million per BTC.
- Standard Chartered (LON:STAN) are looking at a more conservative $150,000 price tag by the end of 2024.
Technical Analysis of Bitcoin
Bitcoin against the USD has been relatively range-bound since its latest all-time high level, reflecting investor and trader indecisiveness. However, big names in finance have big expectations of it.
Support & Resistance levels
- $73,800 – This is the current all-time high and it serves as a major resistance.
- $71,500 – This resistance level has been tested frequently on the daily chart post-ATH
- $66,500 – Immediate support below the current market price. Has been tested continuously on the daily chart and was also a major resistance in 2021 before breaking it and setting an all-time high
- $60,670 – This level has shown decent support, having been broken only once.
Fair-value gaps
- The powerful buying activity on February 26, 27 and 28 produced what can be perceived as a couple of fair-value gaps where the bears might want to take the price back to.
- Besides that, the $56,500 level was tested once, which means it can be a support. Considering the fair-value gap below it, it's possible that continued selling pressure there could potentially stop out pending buy orders set up on that level, further decreasing the price.
Moving Average Convergence/Divergence (MACD)
- On the daily chart, the MACD line crossed the signal line on the 5th of May from below, signaling bullish momentum, especially since it was under the zero line.
- It crossed it again, this time from above, on the 8th of June, signaling a rather weak bearish movement given it wasn't far above the zero line.
Relative Strength Index (RSI)
- The RSI has been oscillating around the 50 level for a long time, showing trader reluctance towards rapid buying or selling.