Harris's election could lead to volatility in the crypto market, especially significantly impacting sentiment-driven assets like Dogecoin.

Written by: Alvis, Mars Finance

As the 2024 U.S. presidential election approaches, the tension in the capital markets has reached a critical point, and the cryptocurrency market is particularly on edge. This year, Trump, who has gone through life-and-death crises, is campaigning vigorously, and his bold statement of "making America the crypto capital" has instantly ignited enthusiasm in the crypto community. However, history repeatedly reminds us that subtle changes in policy often become a watershed moment for the market.

Looking back at Roosevelt's "New Deal" after he took office in 1933, the economic rules in the U.S. were completely reshaped overnight, forcing many companies to adapt to the new policy direction, and the market landscape was reshuffled. This time, the cryptocurrency industry may be facing a similar fate. With Harris's steady progress in the campaign, her highly aligned policy stance with Biden suggests that the current government's anti-crypto regulations may continue to intensify. For a crypto market that advocates freedom and decentralization, this policy direction could be a true life-and-death test.

So, if Harris is elected, what will the future of cryptocurrency look like? What significant opportunities might arise? We will delve into these questions for a deeper analysis.

According to data from the prediction site Polymarket, Trump's probability of winning is currently 62.5%, while Harris's chances are only 37.5%. Although the prediction market believes Trump has a higher chance of winning, a poll by Forbes on October 31 shows that Harris is leading Trump nationwide by a slim margin of 1%, with 10% of voters potentially changing their stance before the election.

In the seven key swing states that will determine the election outcome, Harris's support rate is 49%, slightly ahead of Trump's 48%. Just a week ago, Trump was leading Harris in these states by 50% to 46%.

Therefore, although many crypto supporters are more optimistic about Trump's election, Harris still has a chance to succeed.

Historically Underdog Presidents Who Made a Comeback

There have been several instances in U.S. history where candidates who were not favored at the beginning of their campaigns, or were even underestimated by polling data, ultimately made a successful comeback.

• In 1948, Truman was one of them. Polls showed he was trailing behind Republican candidate Thomas Dewey. The media and polling agencies even prematurely announced Dewey's victory, with some newspapers printing headlines stating "Dewey Defeats Truman." However, Truman conducted a series of intensive campaign activities, directly addressing voters and emphasizing the Democratic Party's achievements in economic and social policies, ultimately winning the election. This election is considered a classic case of polling failure.
• In 1992, Clinton was not a popular candidate within the Democratic Party during his campaign. He faced a slump due to a series of negative reports and scandals, and many experts predicted he would struggle to make it to the end. However, due to his flexible campaign strategy, ability to communicate with the public, and the economic difficulties at the time, he gradually gained support. Ultimately, he defeated incumbent President George H.W. Bush and third-party candidate Ross Perot in a three-way race.
• In 2016, Trump himself also staged a major turnaround. When he entered the race, he was seen as a "hopeless" candidate in the Republican primaries and was severely underestimated by mainstream polls in the final battle against Hillary Clinton. Throughout the campaign, Trump garnered significant support from voters, especially in swing states, due to his strong populist style and appeal to the American middle and lower classes, ultimately winning the election.

Thus, it seems that before the actual voting results are revealed, one should not jump to conclusions. Just like Bitcoin faced black swan events even during its most bullish phases, no one can predict the final outcome of the election in advance.

Harris's Election: Disaster or Market Adjustment? Market Opinions are Polarized

First, we must acknowledge that if Harris is elected, there is a high probability that she will continue the policy tone set during the Biden administration. At this moment, cryptocurrency investors feel a bit like they are on a roller coaster.

Analysts from the renowned firm Bernstein have predicted that if Harris wins, Bitcoin's price may see a significant drop by the end of the year, potentially falling by 10%.

On the other hand, veteran crypto trader Crypto Rand remains much calmer. He believes that regardless of who occupies the White House, the overall direction of the crypto market will not change, and a bull market will eventually arrive, although the path may be bumpy.

So, there are two key points here: first, Biden-style policies are not friendly to cryptocurrencies; second, the market is speculating on whether Harris will intensify regulations, leading to greater uncertainty.

Crypto Rand states that even so, Bitcoin may bottom out and rebound by 2025, driving the entire market into a new bull cycle. These predictions are not unfounded, as both Bitcoin and altcoins have already experienced significant fluctuations as a norm in the crypto market. For some staunch supporters, this is merely a short-term fluctuation and does not represent a reversal of the overall trend.

Continuation of Regulatory Policies: Gary Gensler's "Enforcement Regulation" and the Biden Administration's Regulatory Path

To accurately predict Harris's policy direction, we need to understand how the Biden administration has treated cryptocurrencies. Since Biden took office, the U.S. Securities and Exchange Commission (SEC), under the leadership of current Chairman Gary Gensler, has adopted an "enforcement regulation" model, particularly targeting the cryptocurrency industry with a heavy hand. The SEC has not only filed lawsuits against major exchanges like Binance and Coinbase but has also thoroughly investigated unregistered cryptocurrency securities. There is a widespread belief both inside and outside the market that Gensler's regulatory approach is characterized by a clear high-pressure stance, as he has single-handedly become the "guardian of order" in the crypto market, but his methods have also sparked considerable controversy, with some accusing him of being a "disruptor" of the market.

Here are some of the regulatory bills and enforcement actions from early 2021 to the end of Biden's term in 2024, reviewed chronologically:

2021

• March: The Financial Crimes Enforcement Network (FinCEN) under the U.S. Treasury proposed strengthening anti-money laundering (AML) and "Know Your Customer" (KYC) requirements for cryptocurrencies to curb their use in illegal activities.
• August: The Commodity Futures Trading Commission (CFTC) filed a lawsuit against the cryptocurrency trading platform BitMEX, accusing it of failing to implement appropriate AML and KYC measures. Ultimately, BitMEX agreed to pay a $100 million fine and reached a settlement with the CFTC.

2022

• February: The SEC filed a lawsuit against the crypto lending platform BlockFi, accusing it of failing to register its yield account products as securities. Ultimately, BlockFi agreed to pay a $100 million fine.
• March: President Biden signed an executive order on digital assets, requiring federal agencies to coordinate the development of a regulatory framework for cryptocurrencies aimed at protecting consumers, maintaining financial stability, combating illegal activities, and exploring the possibility of a U.S. central bank digital currency (CBDC).
• June: The U.S. Department of Justice established a national cryptocurrency enforcement team, which immediately intervened in several cases, including tracing cryptocurrency assets from the "Silk Road" illegal trading platform and assisting in tracking international illegal transfers of crypto assets.
• September: The U.S. Treasury released three reports on digital assets, focusing on the risks of cryptocurrencies in illegal finance, consumer protection, and payment systems, further clarifying the government's regulatory stance on cryptocurrencies.
• October: The SEC began investigating the NFT project Bored Ape Yacht Club (BAYC) under Yuga Labs due to concerns that its tokens might involve unregistered securities sales.
• December: Following the FTX bankruptcy incident, the CFTC, SEC, and Department of Justice jointly launched an investigation into FTX to determine whether there was misuse of customer funds, illegal misappropriation, and fraudulent activities.

2023

• May: Bipartisan members of Congress proposed the "Cryptocurrency Tax Fairness Act," suggesting the implementation of capital gains tax exemptions for small transactions to promote the everyday use of cryptocurrencies and ensure the industry is not stifled by complex tax systems.
• August: The SEC filed lawsuits against major cryptocurrency exchanges Binance and Coinbase, accusing them of not being registered as securities exchanges and classifying some crypto assets as unregistered securities. This action by the SEC is seen as a comprehensive cleanup of the cryptocurrency market, particularly imposing stricter compliance requirements on trading platforms that do not meet securities law standards.
• September: The Biden administration expressed its intention to further scrutinize all crypto assets using proof-of-stake (PoS) mechanisms, proposing to define them as securities. The SEC began to strengthen its regulation of PoS assets like Ethereum, stating that their voting rights structure is similar to traditional stocks and may need to comply with securities laws.
• November: Binance agreed to pay a $4.3 billion fine to settle the U.S. government's years-long investigation. Binance admitted to participating in alleged money laundering, unlicensed remittances, and violations of sanctions. Meanwhile, founder Changpeng Zhao (CZ) acknowledged failing to maintain an effective anti-money laundering program and resigned as CEO.

2024

• April: Changpeng Zhao was sentenced to four months in prison by a federal court in Seattle for violating U.S. anti-money laundering laws (he has since been released).
• May: The U.S. House of Representatives passed the "Financial Innovation and Technology for the 21st Century Act" (FIT21), laying the legal foundation for the regulation of digital assets and further clarifying the regulatory responsibilities of the Commodity Futures Trading Commission (CFTC) and the SEC, especially in the management and oversight of crypto assets and digital financial products. The FIT21 bill is seen as a significant foundational step for federal-level digital asset regulation.
• June: The U.S. Treasury issued a final rule requiring all cryptocurrency platforms to report user transaction details to the Internal Revenue Service (IRS) starting in 2026, aiming to tighten regulation of cryptocurrencies in the tax domain and reduce tax evasion.

These events and bills undoubtedly indicate that the Biden administration's overall attitude towards cryptocurrencies leans towards strong regulation. Under Gary Gensler's leadership, the SEC has adopted an "enforcement regulation" approach, bringing the cryptocurrency industry under a stricter legal framework, requiring market participants to comply with compliance standards.

It is worth noting that Gary Gensler's future role is currently uncertain. Although Trump has promised to fire Gensler "on the first day" if elected, legally he cannot directly decide the fate of the SEC chairman. Harris has not yet made a formal statement regarding Gensler's reappointment, and market analysts generally believe that Gensler's "enforcement regulation" strategy may face resistance.

Renowned cryptocurrency analyst Crypto Rand bluntly stated that Gensler's policies are "the biggest burden on the U.S. cryptocurrency industry."

The policy director of the U.S. decentralized exchange dYdX, Rashan Colbert, also pointed out that if the new government can replace the SEC chairman, it would mark the end of overreach in enforcement and harmful regulation, which could help the compliant development of the crypto market.

Billionaire investor Mark Cuban has also expressed doubts about Gensler's enforcement approach, believing that Harris's team tends to oppose the "enforcement regulation" model and hopes to promote the development of the crypto market through a clear regulatory framework.

Cuban noted that Harris "prefers clear regulatory provisions rather than relying on litigation," which would allow companies to develop applications without having to move overseas.

Other industry observers believe that even if Harris replaces Gensler, the enforcement intensity in the cryptocurrency market will not diminish. Venture capitalist Tim Draper further called for a complete update of U.S. securities laws, pointing out that the current Howey Test was established 80 years ago and is no longer suitable for the "dynamic, ever-growing modern market environment." The real breakthrough lies in whether more transparent and clear regulations can reduce industry uncertainty. This is of great concern in the market, as a clear regulatory framework can help businesses and investors make more stable arrangements, rather than feeling like they are walking a tightrope every time a policy is announced.

Global Liquidity and Market Opportunities: Will Loose Monetary Policy Become a Bull Market Driver?

Yang Youwei, chief economist at Bit Mining, pointed out that if Harris is elected, cryptocurrency investors should pay special attention to monetary liquidity in the global economy.

Here’s the key point: Will the so-called "hot money" flow back into the crypto market again, becoming a catalyst for a new bull market? Yang Youwei's view is clear: the looser the monetary policy, the greater the likelihood of funds flowing into the crypto market. Considering the current global economic uncertainty and the generally loose policies adopted by central banks, the inflow of hot money could indeed bring more market opportunities.

Correlation between Bitcoin prices and global liquidity. Source: Lyn Alden

Supporting this view is cryptocurrency entrepreneur Erik Finman. He believes that if the Federal Reserve adopts a more accommodative stance under Harris's leadership, then even with regulatory challenges, increased market liquidity will still support prices. In other words, the further Harris's policies go down the path of "loose money," the greater the bull market potential for the crypto market.

However, all of this hinges on whether the U.S. can withstand greater inflationary pressures. It is foreseeable that if Harris attempts to continue implementing loose policies, she will inevitably face considerable fiscal pressure and market resistance. In this case, businesses and investors must be wary of the volatility risks in the crypto market and cannot easily ignore the chain reactions brought about by monetary policy.

Lack of Clear Policies Triggers Panic: Will the U.S. Crypto Industry Face "Geofencing"?

For many participants in the crypto market, a significant flaw of Harris is her ambiguous attitude towards cryptocurrencies. In September of this year, Harris publicly stated for the first time that her government would encourage investment in artificial intelligence and digital assets to maintain U.S. competitiveness. However, it is evident that such statements lack detail and do not reassure the market. This ambiguity has led many to worry that she may continue Biden's hardline approach, thereby increasing market uncertainty.

Venture capitalist Tim Draper pointedly noted that "fear" has already begun to spread in the industry, especially among smaller crypto companies that are more sensitive to uncertainty. Rather than lingering in the uncertain regulatory environment in the U.S., an increasing number of companies are choosing to go abroad in search of a clearer policy environment. Currently, countries like Dubai and Singapore have more lenient and clear policies compared to the U.S., and the phenomenon of "geofencing" is emerging in the U.S.

Colbert, the policy director of the well-known decentralized platform dYdX, further added, "Other countries are moving faster than the U.S. If the new U.S. government is unwilling to remain competitive in the cryptocurrency space, this trend will continue." Even if the future Harris administration relaxes policies in some areas, a lack of systematic and clear regulations will inevitably push innovators towards more inclusive markets.

2024 Henley Cryptocurrency Adoption Index ranking of the top 10 countries. Source: Henley & Partners

The investment immigration consulting firm Henley & Partners released the "2024 Henley Cryptocurrency Adoption Index," ranking the cryptocurrency adoption status of different countries, placing the U.S. behind the UAE, Hong Kong, and Singapore.

Nevertheless, most large cryptocurrency companies have not left the U.S. Despite the unfriendly attitude of regulators in recent years, the U.S. market is simply too enticing for many crypto enterprises to abandon.

It appears that if Harris is elected president, the market will clearly need clear and strong policy signals to stabilize investor confidence. The current chairman of the U.S. Securities and Exchange Commission has sparked widespread controversy with his tough regulatory approach, and the market generally expects that Harris may appoint new leadership to alleviate industry dissatisfaction.

However, the real challenge lies in whether the Harris administration can find the ideal balance—protecting the fundamental safety of the market while promoting the vigorous development of the industry. Under a looser monetary policy, if a stable policy environment can be provided, the potential of the crypto market will undoubtedly be unleashed.

Dogecoin in Market Volatility and "Pump King" Musk

In the turbulent world of cryptocurrencies, Dogecoin has always been an "outlier." Unlike mainstream crypto assets like Bitcoin and Ethereum, Dogecoin not only exhibits high volatility but also carries a sense of jest and self-mockery. Who would have thought that this cryptocurrency, which started as a joke, would spark a global frenzy under Musk's influence? And this "Pump King," Musk, has long become the spokesperson for Dogecoin, frequently bringing it into the mainstream spotlight through personal tweets and Tesla's financial management, effectively paving a broad path for this niche project with his personal influence.

Dogecoin's price surged by as much as 80% in the past month.

So the question arises: If Trump wins the 2024 U.S. election and Musk takes charge of the so-called "Department of Government Efficiency" (DOGE), the Dogecoin market will undoubtedly become even more lively. But what if Trump loses and Harris is elected?

Harris's policy stance has always been ambiguous, which is not good news for the cryptocurrency market, especially for the highly emotional Dogecoin investors.

Cryptocurrency analyst Crypto Rand predicts that if Harris is successfully elected, panic sentiment in the market may spread rapidly. Since Dogecoin investors tend to focus more on short-term sentiment, once policies are unclear, the market may enter a short-term sell-off mode. In other words, Dogecoin's price is likely to experience a "free fall," and if this panic sentiment is not resolved in a timely manner, it could lead to deeper market volatility.

Musk: Aligning with Trump and His "Puppet Theory" on Harris

That said, Musk's performance in this election has also been quite eye-catching. As the "Pump King" in the tech circle who dares to speak and act, he has clearly aligned himself with Trump this year, even spending millions of dollars to support his campaign. By setting up high-stakes lottery activities, he aims to encourage more voters to participate, especially in key states where the election is tight. This Tesla CEO not only uses his social media influence to rally support but also directly backs the campaign through a political action committee (PAC), tirelessly standing by Trump's side.

Even more controversial is Musk's view of Harris. In public, Musk has unreservedly referred to Harris as a "puppet," stating that she lacks real decision-making power. In his remarks, Harris is seen as a "front-stage puppet"—a political tool lacking substantive decision-making authority. Musk's vigorous support as one of America's top billionaires is extremely rare in U.S. history, leading him to express his "heartfelt" concern—if Trump fails this time, he might be arrested and lose everything.

The "Emotional Panic" in the Dogecoin Market and Future Risks

Compared to Bitcoin and Ethereum, Dogecoin's market structure relies more on emotional guidance. Once investor confidence wavers, it can easily lead to a massive sell-off wave. In the past, with Musk's backing, Dogecoin's price often fluctuated rapidly in a short time. However, if Harris takes office and policies remain unclear, whether Musk's influence can be maintained remains a question mark.

Especially with Tesla's third-quarter financial report coming out, showing a gradually stabilizing financial performance and unchanged Bitcoin holdings, whether Musk's enthusiasm for Dogecoin will be affected by the political situation has also become a market focus.

If Trump loses, the political pressure Musk faces will rise sharply, and his personal activity in the cryptocurrency market may significantly weaken. This is clearly not good news for Dogecoin. After all, Musk's support is a key reason for Dogecoin frequently making headlines in the public eye. Once his "pump" effect fades, Dogecoin's price may enter a phase of emotional-driven volatility, even posing further downside risks.

Conclusion: Unclear Policies + Market Turbulence, Dogecoin Must Beware of "Double Whammy"

In summary, the unclear policies following Harris's election, the risk factors of Musk aligning with Trump, and the instability of investor sentiment all make Dogecoin's future uncertain. The future of Dogecoin is likely to be pulled between Harris's policy tone and Musk's personal influence. For investors, especially short-term speculators, it is crucial to be wary of changes in market sentiment and not to chase highs and sell lows easily, to avoid falling into unnecessary risks.

In conclusion, this 2024 election not only determines the political landscape of the U.S. for the next four years but may also become a watershed moment for the fate of Dogecoin and Musk.

Future Outlook: If Harris Really Becomes President, Will She Reshape the Crypto Market Landscape?

With only four days left until the U.S. election voting day, regardless of who occupies the White House, volatility in the crypto market seems inevitable. In the short term, strict regulatory controls or the benefits of loose monetary policy will only be a peak or trough in the market wave; in the long run, the direction of the crypto market will not change because of this, but the path will become more tortuous and unpredictable.

As for where the future of cryptocurrencies will head, only time will tell.

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