6th November 2024 – (New York) Following a year of generally underwhelming performance compared to Bitcoin, smaller cryptocurrencies such as Dogecoin and Solana may find themselves significantly impacted by the outcome of the U.S. presidential election. While Bitcoin has shown resilience, climbing as much as 4.6% to reach $70,165 on Tuesday—just 5% shy of its record high of approximately $73,800 set in March—smaller altcoins are poised for potential volatility depending on the election results.
Bitcoin, the largest cryptocurrency by market capitalisation, has surged more than 65% this year, marking a remarkable recovery from earlier downturns. Meanwhile, Dogecoin experienced a notable jump of 17% on the same day, fuelled in part by comments from its prominent supporter, Elon Musk. Musk hinted at the possibility of establishing a Department of Government Efficiency, or D.O.G.E., should Donald Trump win the election, further galvanising the meme-inspired cryptocurrency’s community.
Zaheer Ebtikar, founder of the crypto fund Split Capital, commented on the wider implications of the election for various cryptocurrencies. “For Bitcoin, the election doesn’t matter much,” he stated, indicating that the flagship cryptocurrency might remain relatively insulated from political outcomes. However, Ebtikar noted that altcoins could face substantial challenges should Kamala Harris emerge victorious. “They are the biggest winners or losers of the election,” he added, suggesting a pronounced sensitivity among smaller cryptocurrencies to regulatory changes that could follow a Harris administration.
Historically, altcoins—cryptocurrencies other than Bitcoin—have exhibited strong performance cycles, particularly when investors pivot towards smaller-cap coins after Bitcoin rallies. However, in the past year, most altcoins have struggled to keep pace with Bitcoin, with the exception of memecoins like Dogecoin, which are often characterised by their lack of utility. As the original memecoin, Dogecoin’s fortunes are closely tied to cultural and social media trends, often propelled by endorsements from high-profile figures like Musk.
Ebtikar further elaborated on the potential repercussions for the crypto landscape depending on the election outcome. A victory for Harris, he posited, could lead to increased regulatory scrutiny of the cryptocurrency sector. In contrast, Bitcoin and Ether—considered more decentralised than many altcoins—might manage to weather these regulations more effectively. During the campaign, Trump has adopted a robust pro-crypto stance, while his Democratic counterpart, Harris, has indicated support for a regulatory framework aimed at digital assets. This divergence in approach has led many within the crypto community to view a Trump victory as significantly more favourable for the industry.
The sentiments surrounding the election’s impact on the cryptocurrency market do not solely hinge on individual candidates. Some traders maintain that regardless of the election results, the broader market outlook for cryptocurrencies remains optimistic. Shiliang Tang, president of the principal trading firm Arbelos Markets, expressed confidence in the medium-term trajectory of the markets. “We think markets are headed higher regardless of who wins, as we move past the elections and back to macro and the Fed,” he stated, indicating that fundamental economic factors will ultimately play a vital role in shaping market dynamics.
