The upcoming US presidential elections are arguably the most significant political event in the world. Global online forex broker Octa examines how the results could influence the cryptocurrency landscape, highlighting opportunities and risks for South African crypto investors.
Looking back at the 2016 Trump-Clinton election, the cryptocurrency market did not experience significant movement. At the time, digital currencies like Bitcoin were still in their infancy, and their role in the global financial ecosystem was limited. However, by the 2020 election, the crypto market had grown significantly. Despite that, the Bitcoin price remained relatively stable throughout the Trump-Biden campaign.
However, in the 2024 election, cryptocurrency companies like Coinbase and Ripple are investing heavily in political campaigns, supporting candidates who are more likely to help the crypto industry if elected. By some estimates, crypto firms have spent $119 million to influence the upcoming elections highlighting the importance of policy outcomes to the industry.
What happens if Trump wins?
Republican candidate Donald Trump made a splash in July by attending the Bitcoin conference in Nashville. He made it clear that he was supporting and embracing crypto. During the conference, he vowed that to turn the US into the ‘crypto capital of the planet and Bitcoin superpower of the word.’ Trump’s plans signal a potentially bullish outcome for the crypto industry, should he win the election.
For South African traders, Trump’s pro-crypto stance could lead to favourable conditions in the global market, sparking further interest in digital assets and opening doors to greater international crypto investments.
“It remains to be seen whether he is truly willing to support the crypto market or if he is just trying to entice the crypto industry to support him and crypto enthusiasts to vote for him. No matter the case, the main aspects of his speech certainly coincided with the interests of millions of crypto investors worldwide,” said Kar Yong Ang, Octa analyst. “If Trump wins in November, we may see prices of cryptocurrencies appreciating in value—possibly substantially. I will not be surprised if BTCUSD (Bitcoin US Dollar) sets a new all-time high in 2025.”
What happens if Harris wins?
Kamala Harris, the Democratic nominee, has largely remained quiet on the subject of cryptocurrencies, leaving many in the industry guessing about her stance. Harris’s position as Vice President under the Biden administration may suggest she could follow a similar path and introduce tighter controls over the industry.
However, reports indicate that figures in the cryptocurrency industry have approached Harris’s campaign to share their concerns and ideas, signalling potential openness to crypto-friendly policies. At a Democratic Party town hall event featuring the “Crypto4Harris” campaign, Democratic senator Chuck Schumer suggested that crypto legislation could be passed before the end of 2024, hinting at possible developments under a Harris administration.
For South African traders, a Harris victory might introduce more regulatory scrutiny, which could bring both opportunities and challenges. Tighter regulations may reduce market volatility, making it a more stable environment for long-term investors.
“Because Harris does not have a principal position yet, her sentiment could change instantly. In my personal view, she will be under pressure to open up on her plans for the crypto market, which is also a great way for her to attract more votes,” said Yong Ang.
The implications for South African investors
Even though the direct influence of US elections on South Africa’s crypto market may seem distant, global developments have a tangible effect on local markets. South Africa’s Financial Sector Conduct Authority (FSCA) has already begun setting guidelines for crypto assets but shifts in US policy could prompt further regulatory adjustments locally.
If Trump’s pro-crypto stance strengthens the market, South African traders could see greater opportunities for speculative trading. However, Harris’s potential regulatory approach might stabilise the market, providing long-term growth for major cryptocurrencies like Bitcoin and Ethereum, which are popular in South Africa.
Proceed with caution
With both candidates offering very different approaches to crypto, traders should be prepared for volatility leading up to and following the election. Bitcoin and other major cryptocurrencies are known for their large price swings, and the uncertainty surrounding the US election could lead to further volatility.
According to Octa, traders should keep an eye on key technical levels for major cryptos like Bitcoin, especially if it approaches significant price thresholds like $50,000 or $63,000. In this environment, South African investors are advised to use risk management strategies such as stop-loss orders and portfolio diversification to protect against unexpected price movements.
Conclusion
September and October could have set the tone for the actual impact in November when the US election results are announced. September has traditionally been a bearish month for Bitcoin. Since 2019, Octa has observed four red months and only one green month.
Ultimately, the crypto industry’s expansion and regulatory framework depend on the policies of the next US president. As such, South African investors must remain adaptable in response to these potential changes.
