Now that the 2020 US Election has been called, barring any further drastic action by the current Trump administration and its supporters, Joe Biden has brought a wave of political and economic certainty to the hegemonic power, which has been plagued by immense volatility on all fronts in the last four years.
It also meant Bitcoin (BTC) dipping back into the $14,000 range over the weekend, but the drop was only temporary, as the orange rose up above $15K again 24 hours later. It is currently trading at $15,472 at the time of writing. Based on investor reactions when the results were announced however, what would Biden’s administration do for the crypto market?
Firstly, unlike Trump who has occasionally made confusing tweets against crypto and Bitcoin throughout his term, Biden has not yet voiced his opinion on cryptocurrency. Crypto advocates believe that Biden’s on-the-fence position with crypto will allow the digital assets industry, especially in the US, to grow with lesser hindrance and opposition. At the very least, Bitcoin prices will unlikely see an abrupt decline simply because the US president voiced his criticisms of the alternative asset in a post which allows for no more than 280-word characters on the blue app.
A Democratic administration in general will help to boost the market as it tries to push forward another stimulus package, which will drive inflation upwards and reinforce the narrative of Bitcoin being a worthy store-of-value over the US dollar. However, it is also likely that the Senate will retain its Republican majority for the next term, which means we will continue to see the rejection of stimulus packages put forth by the House.
Moreover, Biden’s administration may see the addition of personnel who are more open to digital assets, or have experience in the cryptocurrency landscape. This will go a long way in providing regulatory clarity for crypto in its favour.
“An early area of focus is likely to be the Consumer Financial Protection Bureau, with the Biden administration likely to ramp up enforcement activities, particularly for payday lenders and debt collectors, which is unlikely to affect Bitcoin and cryptocurrencies in the immediate future,” commented Patrick Tan, CEO of digital assets hedge fund Novum Alpha. “But as Biden won’t be able to put a mark on other financial regulations for a while, with US Federal Reserve Chairman Jerome Powell’s term only expiring in February 2022, Bitcoin investors can expect more of the same for now.
“Banks and other financial institutions which have just started poking around cryptocurrencies and other digital assets may also pull back on further exploration of the space until Biden’s views on the nascent sector become clearer,” he added.
According to the Wall Street Journal, the 46th US President is rumoured to be considering ex-Commodity Futures Trading Commission (CFTC) chairman Gary Gensler as financial advisor to oversee Wall Street. While not fully a Bitcoin advocate, Gensler called Bitcoin a “catalyst for change” in a contributed article to Coindesk previously. In his four years as CFTC chairman under the Obama administration, Gensler made a name for himself with his strict and clear approach to revising financial regulations with for example, derivatives trading.
Aside from all these factors, the most important aspect to the longevity of the crypto market and its most capitalized assets is inarguably the undeniable strength of Bitcoin. BTC may have declined on the news of Biden’s win, but the market recovered swiftly to push it to the $15,500 level after, which goes to show that its price and industry fundamentals cannot be easily shaken by this year’s change in US’ government administration.
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