JOHN DAVENPORT: Will the US get its first crypto president?

Crypto investors have not had much to be happy about recently. Relentlessly poor performance from the sector has doubtless had them drowning sorrows in home-brewed lager, marathon sessions of PUBG and World of Warcraft, or prescription meds bought on the dark web.

But Donald Trump seems to have brought a ray of light into what has become a dark, dingy world haunted by the ghosts of “what ifs” and “almost”. Or, more accurately, the combination of Trump, his would-be shooter and Joe Biden’s age have served to bring crypto investors a home delivery of good news.

Bitcoin surged 4% over a very short period to pass $68,000. Meanwhile, other cryptocurrencies like ethereum and solana rose more than 2% and 7.8% respectively. The question (as is generally the case with crypto assets) is why?

One of the main drivers of the surge is that Trump has recently made an effort to win support among crypto enthusiasts. He was headline speaker at the Nashville Crypto Conference. This appearance correlates with multiple statements about how a Trump administration would be likely to loosen banking regulations governing cryptocurrencies and exchanges.

One explanation for this is fundraising. Seats at dinners with Trump before and after the conference reportedly cost up to $800,000 a plate. But it also seems there is a bigger game under way to aggressively build support in the crypto community.

This makes sense, because it is easy to see how Trump’s rebellious, quasi-libertarian outsider message would resonate with them. In fact it seems probable that his support there would already be strong, so his pivot to a pro-crypto message is probably less linked to winning their support than to ensuring these voters actually register and go to the polls.

In tight elections, where few undecided voters are there to be won, voter turnout is key. And if Trump gets the crypto crowd to the polls that small niche of voters could make a difference in tightly contested swing states.

Cryptocurrencies may also have rebounded because there are fundamental economic reasons a Trump presidency could be good for crypto markets. A financial policy that is likely to include deficit-driven spending, less US involvement in international affairs, increased erosion of the Federal Reserve’s independence and a long-stated goal of reducing the US trade deficit by lowering the value of the dollar could all combine to create dollar weakness. Any decrease in the value of the dollar has tended in the past to increase the value of cryptocurrencies — a boon to those long-suffering markets. 

Furthermore, it has been shown that scenarios involving political instability and inflation can sometimes benefit assets such as crypto. A peer-reviewed study from 2019 showed that the speculative crypto markets generally benefit from perceived political instability, especially when combined with inflation. And a Trump administration is likely to be a wellspring of both, possibly pushing crypto markets upwards.

Trump critics suggest a charge towards deregulation of the cryptosphere is typical of a general approach designed to recruit support from the angry and disadvantaged for a legal framework that will impoverish them even further, as the powerful have carte blanche to take advantage of the less powerful. In this case enabling the big “crypto bros” to extract what little wealth the lesser “crypto bros” possess.

Just in case you were still in any doubt about the likely sympathy of a Trump presidency for the crypto cause, take a look at his vice-presidential pick. Recent financial disclosures showed that JD Vance is still an avid crypto trader, holding up to $250,000 in crypto assets.

This would suggest that the Vance, who in 2020 was recorded on camera angrily calling US Securities & Exchange Commission chair Gary Gensler’s crypto regulations “fascist”, is just as alive and well as the Vance who doesn’t believe domestic violence is a real thing, and that childless women aren’t really women at all.

A few months ago Trump suggested that he would be America’s first “crypto” president. As voters play Spin the Molotov Cocktail with their futures, this is starting to seem likely.

• Davenport is chief creative officer for Vice Media & Virtue Advertising London & Dubai, a part-time psychology student and an occasional war correspondent.