Why the Election Results Are Good for Crypto

News, Opinion | November 17, 2020 By:

In a year full of uncertainty and economic hardship, cryptocurrencies have performed relatively well. As the general stock market grew volatile amid the chaos of 2020, crypto provided investors with a haven. Now, though, some are worried about how the stock market after the election will affect cryptocurrencies.

Before the election, many investors worried that results would be long and unclear, leading to market volatility. This was true for a few days, but, despite Trump’s unwillingness to concede, Joe Biden emerged as the winner sooner than some expected. Clear results are generally good for markets, but crypto showed troubling activity at first.

Despite recent highs, Bitcoin prices fell by 2.43% after major networks declared a Biden victory. Similarly, Ethereum fell by 3.62%, and crypto suffered a 2.27% decrease. While these early signs seem worrying, the election’s results may prove beneficial for crypto.

Moving Away from Crypto Naysayers

Biden hasn’t said much about cryptocurrency, so it’s unclear whether he’ll support it or not. The blossoming crypto market is far from his top priority, but he hasn’t taken a negative stance towards it. The Trump administration, on the other hand, has indicated hostility towards crypto.

Trump tweeted that he’s “not a fan” of Bitcoin after Facebook unveiled Libra, its cryptocurrency project. Treasury Secretary Steve Mnuchin has also expressed deep concerns over crypto and announced preparations for substantial crypto regulations. A change in administration would help move away from these anti-crypto stances, helping cryptocurrencies succeed.

By contrast, Biden reportedly tapped Gary Gensler to oversee financial industry transitions in his first term. As chair of the Commodity Futures Trading Commission, Gensler expressed positivity towards Bitcoin and other cryptocurrencies. So even though Biden hasn’t taken a strong pro-crypto stance, his potential administration seems more crypto-friendly than Trump’s.

Potential for Further Stimulus Spending

Perhaps the most promising sign for crypto in a Biden presidency is the potential of higher government spending. Throughout much of 2020, economic hardship has prevented many people from investing much. That could change with another stimulus bill, which is more likely to come under Democratic leadership.

Trump announced that he would delay further stimulus talks until after the election, which he did. Since his focus seems to linger on contesting the election results, it doesn’t seem like a second bill will come anytime soon. Congress Democrats have pushed for another stimulus bill and higher spending, so a Biden presidency will likely see that happen.

Another round of stimulus checks would relax the economy, making higher-risk assets more appealing to investors. Crypto has also surged in popularity this year, so there may be many people waiting for an opportunity to invest. Further stimulus spending could provide that chance, encouraging more crypto activity.

Promising Crypto-Adjacent Technology Performance

Finally, things look bright for other technologies that could help boost crypto. Many of these changes aren’t coming necessarily because of a Biden win, but because of a win in general. Conclusive election results will boost markets as a whole, which will affect crypto spending.

Fintech has become a market powerhouse in recent years, and it’s grown closer to crypto. Most notably, PayPal announced crypto support, enabling users to pay with crypto sometime next year. Now that election uncertainty is mostly behind us, tech stocks have rallied from recent pre-election drops. 

The election itself saw AP post results on the Ethereum and EOS blockchains, showcasing mainstream adoption of the technology. Since blockchain and crypto are so closely related, rising publicity in one will influence the other. This election season could inspire further blockchain adoption, paving the way for a more mainstream embrace of cryptocurrencies.

Crypto’s Future Looks Bright Despite Uncertainty

The long-term effects of the stock market after the election are still unclear, as Biden’s victory is relatively recent news. Market reactions to a Biden presidency come from mere speculation at this point. Despite this uncertainty, there are promising signs on the horizon for Bitcoin and other cryptocurrencies.

Regardless of the election’s outcome, it’s been a good year for crypto, and that trend will likely continue. Biden’s spending policies and pro-crypto administrators could supplement the inevitable rise of cryptocurrency. 2020 has been an uncertain and often troubling year, but things are looking up for the crypto market.