Bitcoin experienced a drop on Wednesday as traders reacted to the heated U.S. presidential debate between Democratic nominee Kamala Harris and Republican candidate Donald Trump, an avid supporter of the crypto sector. The digital currency dipped by as much as 2.6%, later recovering slightly to trade at $56,600 by 6:30 a.m. in New York. Broader financial markets showed mixed results, with a dollar index and Treasury yields declining while the yen strengthened.
Bitcoin’s ties to the political landscape were evident during the debate. Often referred to as one of the so-called “Trump trades” due to the former president’s vocal backing of digital assets, the cryptocurrency’s fluctuations became a potential indicator of who might have gained momentum in the political showdown.
Throughout the debate, Trump faced frequent criticism from Harris, who pressed him on various topics. Notably, pop star Taylor Swift endorsed Harris immediately after the debate concluded, further boosting the Democratic nominee’s visibility. Betting markets swiftly reflected a shift in Harris’s favor following the event in Philadelphia.
Market Reactions to Debate Performance
“The market assessed Kamala Harris won the debate, in particular in the early stages, which translated into a small move down for crypto,” said Caroline Mauron, co-founder of Orbit Markets, a firm providing liquidity for digital-asset derivative trades.
Despite the speculation, Harris has yet to reveal her full stance on cryptocurrency. Last month, a campaign adviser hinted that Harris would support policies aimed at fostering growth within the industry while also focusing on potential safeguards. Trump, on the other hand, has made a dramatic pivot toward the crypto sector, calling for the U.S. to become the “crypto capital of the planet.” This is a stark contrast to his earlier characterization of the industry as a “scam.”
Trump’s Crypto Projects and Political Influence
Trump has not only voiced his support for digital assets but has also personally ventured into the crypto space. He recently released his fourth collection of non-fungible tokens (NFTs), with images portraying him in various heroic depictions, such as riding a motorcycle or posing as a boxer. These NFTs have generated millions of dollars in sales.
Additionally, Trump and his sons, Eric and Don Jr., have been promoting a new initiative called World Liberty Financial. The project aims to target the niche decentralized finance (DeFi) sector, although details remain unclear. Last week, hackers briefly compromised the Trump family’s social media accounts, issuing a fake post about the initiative.
Crypto has become an influential player in the 2024 presidential election, with significant contributions flowing into political action committees. The industry has been advocating for friendlier regulations, pushing back against the critical approach taken by the Securities and Exchange Commission (SEC) under its current chair, Gary Gensler.
Bitcoin’s Recent Performance
Earlier this year, Bitcoin surged to a record high of $73,798, driven by demand for U.S.-based exchange-traded funds (ETFs) dedicated to cryptocurrency. While the rally has since cooled, the substantial gains have helped ease memories of the 2022 bear market and the high-profile collapse of the FTX exchange, which remains one of the largest financial scandals in U.S. history.
