The 2024 U.S. Presidential Election Through a Crypto Lens: The Tipping Point From Strict Crackdowns to Innovation Support

Since its creation, Bitcoin has weathered three election cycles, and by 2024 it had become a major issue in the U.S. presidential race. As the philosophy laid out in Satoshi Nakamoto's whitepaper has gained mainstream acceptance, Bitcoin's supporters have coalesced into a voting bloc that American politics can no longer ignore. This article examines the diverse factors behind Bitcoin and crypto's rising political importance, including: the erosion of real wages by inflation, challenges to the U.S. dollar's global reserve status, surging crypto interest among American voters, and the current administration's regulatory posture toward the crypto industry.

This article was written by the HTX Ventures research team. It takes a deeper look at the contrasting views of presidential candidates on crypto and how those stances will shape future policy direction and market expectations. It also discusses the role of prediction markets — Polymarket in particular — in the election, potential directions for prediction market innovation, and how the election outcome will affect the crypto market from a macro liquidity standpoint.

Finally, the article forecasts the potential impact of the election results on crypto businesses. A Trump victory is expected to bring a clearer, more flexible regulatory environment — one that would help crypto startups incubate and grow, open up public listing pathways for crypto companies, give traditional investment institutions a safer exit, amplify wealth effects, improve the financial environment, and accelerate DeFi's penetration into mainstream finance while driving innovation and development in the BTCFi space.

Why Crypto Has Become a Central Election Issue

Bitcoin's Strategic Importance to the United States

Growing Demand for Inflation Hedges

A Forbes survey found that after adjusting for inflation, real wages in the United States have barely risen since the mid-1980s. In inflation-adjusted terms, the average American hourly wage today has the same purchasing power as it did in 1978. This has deepened an already widening wealth gap: the upper class has seen its wealth grow by holding large amounts of fixed assets, while the real wealth of wage earners has steadily eroded.

Since the 2008 financial crisis, Bitcoin has increasingly been viewed as a potential tool against inflation and economic instability — offering the middle class a path toward financial independence in particular. Its decentralized nature and fixed supply make it an alternative asset insulated from government and central bank intervention. While the U.S. dollar remains the world's reserve currency, Bitcoin's appeal is growing as investors seek assets that hold their value. It is seen as an effective hedge against inflation, especially for wage earners facing mounting financial pressure.

Regardless of whether Trump or Kamala Harris wins the upcoming presidential election, U.S. fiscal policy is likely to produce larger budget deficits. According to the Congressional Budget Office, the federal budget deficit will average 6.2% of GDP over the next ten years. If Trump extends his 2017 tax cuts and continues lowering rates, the deficit could climb to 7.8% of GDP. Harris, by contrast, plans to raise the corporate tax rate to 28%, but her other reform proposals could still leave the deficit at 6.5% of GDP.

[Link to grayscale.com/elections]

Over the past 25 years, U.S. federal debt as a share of GDP has surged from 40% to 100%, and could rise to 124%–200% over the next 10 to 30 years. The upcoming presidential election could trigger a "Minsky moment" — when the bond market recognizes the severity of the debt problem and demands higher yields to compensate for fiscal risk. Such a moment could trigger a bond market collapse and spark a broader financial crisis.

Both Trump's tax cuts and Harris's tax increases could worsen the U.S. deficit and debt burden, increasing the risk of financial market instability. There are very few ways to resolve debt at this scale, and inflating it away through monetary expansion may become the only viable path for the U.S. government. But inflation's negative effects would erode the purchasing power of wage earners and deepen wealth inequality.

Notably, a Bitcoin bill currently awaiting Congressional approval could offer a new solution to the U.S. debt problem. The bill aims to integrate Bitcoin into the broader financial system, potentially helping stabilize the U.S. debt structure by drawing in large amounts of private and institutional capital — and even providing a measure of stability to the global financial system. As a decentralized, scarce asset, Bitcoin could give governments and investors tools to hedge against inflation and serve as a safe haven, carrying particular strategic significance in the face of debt and inflationary pressures.

Reinforcing the U.S. Dollar's International Influence

Stablecoins — among the most widely used crypto products today — have become the center of policy discussions, with Congress considering several related bills. One of the key drivers of this conversation is the recognition that stablecoins could help reinforce the United States' global influence as its reserve currency status gradually weakens. Currently, more than 99% of stablecoins are denominated in U.S. dollars, far outpacing the second-largest denomination — the euro — which accounts for just 0.20%. The widespread use of stablecoins continues to entrench the dollar's dominance in the digital asset market, while also opening new avenues for the U.S. to maintain its edge in the global financial system.

Beyond extending the dollar's international influence, stablecoins could also shore up America's domestic financial foundation. Despite being less than a decade old, stablecoins have already become one of the top 20 holders of U.S. Treasury bonds — surpassing countries like Germany. This suggests that stablecoins are not only contributing to global dollar dominance but may also become an indispensable part of the U.S. financial system by absorbing large volumes of Treasuries and providing additional liquidity support for the economy.

Rising Crypto Interest Among Voters

A national survey conducted by Grayscale, a leading digital asset manager, on behalf of Harris Poll found that nearly half of likely U.S. voters said they would be more likely to support a candidate with a positive view of crypto than one who doesn't engage with the issue.

At the same time, crypto interest among voters in swing states has risen significantly. In two key battleground states expected to see fierce competition — Pennsylvania and Wisconsin — Google searches for crypto have climbed to fourth and fifth place respectively since the 2020 election, while crypto-related Google searches in Michigan rank eighth nationally.

The Biden Administration's Regulatory Crackdown on Crypto Businesses

The Biden administration moved early in its term to tighten crypto regulation, aiming to establish a stricter oversight framework. Measures included: filing securities charges against Ripple, expanding tax reporting requirements for crypto businesses and Bitcoin miners, and imposing capital gains taxes. Following the collapse of FTX, the government intensified its push to hold major crypto firms accountable and made significant legal progress. For example, Zhao Changpeng, former CEO of Binance — the world's largest crypto exchange — was sentenced to four months in prison in connection with U.S. and international legal proceedings. Shortly after, the U.S. Securities and Exchange Commission (SEC) sued Coinbase, alleging that the company had been operating its crypto asset trading platform as an unregistered securities exchange. If successful, the lawsuit would pose a serious threat to Coinbase's business model. Other companies charged include crypto exchange KuCoin, among others.

Crypto Industry Donations Playing a Central Role

In 2024, crypto companies emerged as a dominant force in U.S. political donations. Coinbase and Ripple are now the largest corporate political donors this year, accounting for nearly 48% of total corporate contributions. Fairshake, a super PAC founded in 2023 and led by Josh Vlasto, a former aide to the New York governor, has raised more than $200 million for pro-crypto candidates — making it the highest-spending PAC in this election cycle. Fairshake's goal is to elect crypto-friendly candidates and defeat skeptics, drawing support from firms like Coinbase, Ripple, and Andreessen Horowitz.

These funds are not just influencing presidential candidates' policies — they are also pushing congressional races toward crypto-friendly outcomes. As a result, the crypto industry has stepped out of the shadows to become a major force in American politics.

A notable example came this past March, when Katie Porter — a progressive star in the Democratic Party — had raised more than $30 million for the California Senate race and was widely expected to win. However, she had aligned herself with Elizabeth Warren's political line and sided with Harris on banking regulation issues, which Fairshake labeled as being "anti-crypto." In the California primary, Fairshake spent more than $10 million attacking Porter, undermining her support among younger voters. Through Hollywood billboard ads and targeted messaging, Fairshake accused Porter of deceiving voters to back big-business legislation — causing her campaign funding to be outmatched. She ultimately fell behind fellow Democratic candidate Adam Schiff and failed to advance to the general election in the fall.

This dynamic has pushed many Democratic candidates to add dedicated pro-crypto sections to their campaign websites, signaling to crypto PACs that they are worth funding. Crypto PACs have significantly shaped the policy positions of candidates across the board.

Electoral Impact

The Policy Positions of Both Candidates

Harris

**Harris has made relatively limited statements on crypto policy, saying only that she would "encourage innovative technologies like artificial intelligence and digital assets, while protecting consumers and investors." To address lower-than-expected turnout among Black male voters, she recently rolled out a series of economic security plans — including a promise to develop a crypto regulatory framework to protect the crypto investments of Black men. However, this framework is narrowly targeted at Black voters and lacks clear regulatory details or specific policy positions. It has been criticized by the crypto community as insincere, with many believing she is simply using crypto as an electoral tool.**

The current Biden/Harris administration's stance on crypto regulation has been more adversarial, taking actions that include: filing multiple lawsuits, restricting access to traditional banking services, rejecting bipartisan legislation, and continuing to explore capital gains taxes on crypto. While Harris's crypto policies could be more industry-friendly than Biden's — potentially improving the regulatory environment — her positions on key issues like taxes, Bitcoin mining, and self-custody remain cautious and fall short of Trump's openly pro-crypto stance.

Trump

Republicans have long emphasized personal freedom, and these values align naturally with crypto's decentralization philosophy. The Republican National Committee references crypto in its official platform, stating that Trump will protect the right to mine Bitcoin and "ensure that every American has the right to self-custody their digital assets and conduct transactions free from government surveillance and interference." The Democratic Party, by contrast, tends to favor expanding government power and regulation — which creates some ideological friction with the crypto community.

Trump has demonstrated strong enthusiasm for the digital asset industry, pledging to make the United States "the crypto and Bitcoin capital of the world." He supports Bitcoin mining and has promised to protect the right to self-custody. He has also purchased hamburgers for supporters using BTC on the campaign trail, publicly criticized the SEC's hardline stance on crypto, and stated that he would appoint a new crypto-friendly SEC chair if he returns to office. Trump has also launched his own DeFi project — World Liberty Financial.

Trump has put forward several crypto policy proposals, including:

• Establishing a government Bitcoin reserve: Trump has indicated that his administration would "retain 100% of all Bitcoin currently held or hereafter acquired by the U.S. government," with these holdings forming "the core of a national strategic Bitcoin reserve." As of October 2023, the U.S. government was estimated to hold more than $5 billion worth of Bitcoin, primarily seized through criminal investigations. It remains unclear, however, how these reserves would be used, whether the plan is feasible, and even whether it would be broadly embraced by the crypto industry.
• Establishing a crypto advisory council: Trump proposed forming a "Presidential Council of Advisers on Bitcoin and Crypto" in Nashville, stating that the council would consist of people who "love the industry" — not "crypto haters."
• Blocking the Federal Reserve from issuing a digital currency: Many countries around the world are pushing ahead with central bank digital currencies (CBDCs), but this trend has faced pushback from the U.S. crypto community. While the Federal Reserve has not yet decided whether to issue a digital dollar, it published a report in January 2022 discussing the potential costs and benefits of a CBDC. Trump has repeatedly and publicly opposed the idea, calling it "a major threat to freedom." In May 2024, the House passed a bill to prohibit the Federal Reserve from creating a CBDC, though the bill still has a long road before it becomes law.

It is worth noting that while Trump holds pro-crypto positions, his tariff policies could create economic uncertainty, and the long-term impact on the crypto market and industry remains unclear.

The Possibility of a "Divided Government"

At present, unless one party can sweep the House, the Senate, and the presidency, a period of gridlock is nearly unavoidable.

As of October 25, Polymarket data showed varying odds for different parties winning the presidential race, the Senate, and the House. Among all outcomes, the only result with high probability was Republican control of the Senate. Meanwhile, a "divided government" scenario — where the presidency and the Senate are controlled by different parties — also appeared highly likely. The last time such a divided government occurred was during the Obama years; it did not happen under either Biden or Trump.

This political scenario typically produces policy gridlock, as the president and the Senate must compromise on major legislation and personnel nominations. However, if Republicans win decisively, they could pass new legislation within just three to six months — which would be a positive outcome for the crypto market, as Republicans tend to push for a more flexible crypto regulatory framework.

On Wednesday, September 25, Congress passed a temporary spending bill to keep government agencies running through December, temporarily averting a government shutdown. Passage of this bill also pushed the final spending decision past the November 5 presidential election. In other words, from December through January 3 of next year — when the new Congress is sworn in — the government's fiscal budget will face certain constraints. This means that presidential power may not have a broad impact on fiscal policy during this transition period, and a formal fiscal budget can only be passed after the new House is seated.

SEC Leadership Is Likely to Change

Since Gary Gensler took over as SEC chair, his aggressive regulatory policies have drawn intense pushback from the crypto community. While he has had some success cracking down on illegal securities offerings, his overly strict enforcement approach has met with opposition from numerous crypto firms.

Trump has publicly stated he would "fire" Gensler if re-elected and push the SEC toward a more innovation-friendly approach to crypto. Traditionally, when the White House changes hands, the SEC chair resigns — and it would not be surprising if a Harris administration similarly moved to soften its stance toward the industry in an effort to win favor. As a result, regardless of whether Harris or Trump wins, SEC leadership will likely undergo significant change.

Macro Liquidity: Volatility Is Inevitable — The Scale of QE Is the Deciding Factor

When the Federal Reserve cuts interest rates and global capital liquidity increases substantially, Bitcoin (BTC) prices have historically risen steadily — demonstrating that macro liquidity continues to be a decisive driver of the crypto market.

In 2020, the Trump administration responded to the COVID-19 pandemic by deploying unlimited quantitative easing (QE), flooding the crypto market with capital. On March 15, 2020, the Federal Reserve cut its federal funds rate target by one percentage point to 0%–0.25% and announced a $700 billion QE program. It then went further, announcing the removal of QE limits entirely and committing to purchase assets based on "actual need" — deploying unlimited QE that delivered massive capital liquidity to the crypto market.

On October 21, 2024, Trump reiterated at a market event in Lancaster, Pennsylvania that he would significantly lower U.S. interest rates if re-elected on November 5. This pledge could once again push crypto asset prices — including Bitcoin — higher, particularly as liquidity continues to grow.

How the Election Will Affect Crypto Startups

Web3 Prediction Markets Achieve Total Dominance Over Their Web2 Rivals

Since launching in 2020, Polymarket has quickly become the leader in this space, capturing 80% of all bets on the U.S. presidential election. It is extremely rare for a blockchain-native app to compete in an existing market and hold the highest market share — yet that is exactly what Polymarket has done. The platform lets users predict and bet on the outcomes of future events across a wide range of categories, including sports, politics, business, and science. Polymarket first gained significant attention during the 2021 U.S. elections, driving 91% of total bets — worth $3.5 million.

Polymarket has faced significant challenges, including a $1.4 million civil penalty settlement with the U.S. Commodity Futures Trading Commission (CFTC), after which Polymarket ceased formal operations in the United States and U.S. users were geofenced from the site. CFTC Chair Rostin Behnam has continued to warn that if Polymarket develops a large enough U.S. "footprint," it should register its derivative contracts or face enforcement action.

Prediction markets are gradually evolving into a more mainstream financial tool, moving well beyond pure speculation. As Polymarket has expanded, its influence has spread into areas including public opinion research, financial risk hedging, and business decision-making.

How Prediction Markets Work

Prediction markets are a type of derivatives market where participants bet on the outcomes of events. These markets typically use binary options — for example, in a binary market, "Will a spot Bitcoin ETF be approved?" can be settled as "yes" or "no." The price distribution of "yes" or "no" shares is determined by the predictions and bets of market participants, with both sides summing to $1, or slightly above $1.

On the settlement date, when the outcome of the event is revealed, the value of each share converges to either $0 or $1. Participants who predicted correctly settle at $1, while those who were wrong settle at $0 — that is how profits and losses are determined.

Outside of crypto, centralized offshore providers typically cap the amount that can be bet on certain outcomes, much like traditional sports betting. This limits individuals from fully capitalizing on their knowledge, and final outcomes are often controlled by the centralized operator. On-chain prediction markets eliminate these barriers — smart contracts and decentralized ledgers create transparent global markets that guarantee platform fairness and immutability.

The Product Evolution of Prediction Markets

Augur was one of the first blockchain-based prediction markets. Its trading volume in 2018 reached $400,000 — quite significant relative to on-chain activity at the time — fully demonstrating real market demand for on-chain prediction markets. However, due to its complex mechanisms and malicious attacks, it failed to sustain a long-term user base.

Unlike Polymarket, Augur allowed anyone to create a market by staking REP (Augur's governance token). Under Augur's mechanism, if there were any flaws in the components that made up a market at creation — such as the market definition, expiration time, or resolution conditions — the market would fail. Attackers could exploit this by deliberately creating flawed markets to game the mechanism and profit. At the same time, Augur's permissionless market creation led to some controversial events, such as a market being created around "When will a specific celebrity die?"

To stay focused on user acquisition in the early stages of building the app, Polymarket centralized market creation internally. It delivered the most user-friendly markets possible and pursued a strategy of ensuring stable early users by curating markets that were ethically uncontroversial and socially beneficial. It selected a series of centralized strategies to ensure that onboarding early users went smoothly. As long as the core trading process was transparent and traceable, that was sufficient.

Prediction Markets Enter the Mainstream

According to the efficient market hypothesis, capital market asset prices quickly and fully reflect all information available to market participants. By that logic, prediction markets are also inherently efficient — which means they have the potential to correct inaccurate predictions (i.e., market inefficiencies) and converge on accurate ones.

Polymarket's founders note that the platform was launched to combat the widespread misinformation and disinformation that proliferated during the pandemic. In practice, Polymarket has already achieved the goal of transforming the speculative impulses of market participants into a genuine public opinion aggregation tool. It successfully predicted that Kamala Harris would likely be nominated as the Democratic candidate and that JD Vance would be chosen as Trump's running mate — both before any official announcements. Polymarket is now widely accepted as an alternative source by mainstream media outlets (including mainland Chinese media that are generally hostile to crypto). The Bloomberg Terminal — broadly purchased by trading desks worldwide — even began integrating Polymarket data into its dashboard in August 2024.

Polymarket is also integrating with content platforms. On July 30, Substack — a prominent content subscription platform — announced the launch of an embedded prediction market feature powered by Polymarket, marking the debut of Polymarket's Substack column, THE ORACLE. In The Oracle, readers will find insights and analysis drawn from thousands of active markets on the Polymarket trading platform. The Oracle regularly aggregates notable markets and their key statistics, while offering in-depth analysis of the hottest topics of the moment.

Future Directions for Prediction Markets

Currently, Backpack Exchange has launched election prediction tokens for the U.S. race, while SynFutures and dYdX have introduced leveraged trading tied to the U.S. election, along with advanced order types (such as limit orders and stop-losses) to help users manage risk. This leveraged trading allows users to deploy larger positions with less initial capital, amplifying potential gains. dYdX focuses more on perpetual prediction trading for Trump, allowing traders to take long or short positions with up to 20x leverage. This flexible trading structure lets users capitalize on any market move and even generate outsized short-term returns.

Overall, the current combination of leveraged trading and prediction markets is still relatively complex for average users to understand and operate, making it better suited to professional traders.

A Trump Win Would Encourage Crypto Companies to Incubate and List Publicly in the United States

Under a Trump administration, a clearer regulatory framework and a more flexible oversight environment would emerge — significantly changing the current situation in which many crypto companies have left the U.S. or blocked American IP addresses. Bloomberg has also reported that several crypto-adjacent companies, including Circle Internet Financial, Kraken, Fireblocks, Chainalysis, and eToro, could go public within the next one to two years, with other qualifying crypto firms also expected to begin the standard listing process.

Looking back at the Biden presidency, current SEC chair Gary Gensler's aggressive regulatory stance has led to a near-total absence of crypto-related IPOs in recent years, directly making it harder for crypto companies to attract traditional venture capital. It is worth noting that the massive wealth effect generated by Coinbase's 2021 listing attracted many traditional funds to open dedicated crypto divisions. Yet in the 2024 Forbes Midas List, Coinbase remained the only crypto project represented.

DeFi and BTCFi Stand to Benefit First

Although the WLFI token from Trump's own DeFi project, World Liberty Financial, sold only 4.3% of its supply and has been criticized for lacking utility, it still signals his genuine interest in the decentralized finance space.

Within DeFi, BTCFi is the easiest to reach consensus on — it has greater legitimacy and a more solid foundation. Its development trajectory is all but certain.

BTC is currently the largest common ground shared by the crypto industry, Wall Street, and the SEC. At its core, BTCFi is about putting BTC to work — staking, lending, trading, and derivatives are all different forms of leverage. Over time, BTCFi will exhibit a value-multiplying growth trend similar to how other asset classes have performed. That said, this development will require a favorable external environment over a sustained period. A Trump election victory could accelerate the process.

Crypto companies building BTC financial tools could receive encouragement and a more flexible regulatory environment, reinforcing BTC's status as the foundational asset. Meanwhile, BTCFi innovation will be developer-driven — enabling a wave of breakthrough applications built on Bitcoin's programmability, such as the 2025 Bitcoin upgrade. This would be the next major upgrade since the 2021 Taproot upgrade, and it is expected to include the passage of OP_CAT. Once OP_CAT is activated, developers would be able to deploy decentralized, transparent smart contract development on the Bitcoin mainnet using Bitcoin-native high-level programming languages such as sCrypt. sCrypt is a TypeScript framework for writing smart contracts on Bitcoin, enabling developers to write contracts directly in TypeScript — one of the most widely used high-level programming languages. Current Bitcoin Layer 2 networks could also be converted into zk rollups. The total scale of BTCFi is estimated to ultimately be ten times the current market cap of BTC itself.

**Currently, many projects are already exploring development around OP_CAT using sCrypt — including Fractal Bitcoin, which functions as a parallel chain for Bitcoin, has already enabled OP_CAT support, and launched the CAT protocol. Projects such as Babylon — a restaking project built using Bitcoin's scripting language — and Shell Finance, a proj