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By Marni Rose McFall
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Bitcoin's price dropped on Wednesday following the presidential debate and amid a wider decline in risk-driven assets.
On Tuesday, Vice President Kamala Harris and former President Donald Trump went head-to-head in the second presidential debate of the 2024 race, which saw both candidates on the offensive. President Joe Biden, previously the presumptive Democratic nominee, ended his campaign following a poor performance in the first debate.
Following the event, Newsweek polled readers online, asking, "Who won the Sept. 10 presidential debate?" Readers had Harris outscoring Trump by 2 to 1.
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The debate, which took place in Philadelphia, began at 9 p.m. ET, and bitcoin fell 1.2 percent, to $56,258, by 1:58 a.m. Wider cryptocurrency prices also dipped. The negative turn occurred after the debate ended, Investing.com reported.
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According to the outlet, the increased competition for Trump has led to anxiety for crypto marketers, given his outspoken support for the sector, and speculation over Harris' stance.
None of the topics covered in Tuesday's debate mentioned cryptocurrency, and Trump didn't reference it when speaking about his planned economic policies.
Bitcoin has seen steep losses recently, with the token falling to $52,000 last week. Broader crypto markets have also seen a retreat, with the cryptocurrency ether falling 0.8 percent to $2,330.17, according to Investing.com.
Initially a critic of cryptocurrency, having branded them a "disaster waiting happen" in 2021, Trump changed his stance in March, and the Trump campaign later announced that it would accept cryptocurrency as donations.
The campaign vowed to "build a crypto army moving the campaign to victory on November 5." Newsweek has contacted the Trump campaign for comment.
On September 5, Trump spoke at the Economic Club of New York and vowed to turn the U.S. into the crypto capital of the world. "Instead of attacking industries of the future, we will embrace them, including making America the world capital for crypto and bitcoin," he said.
Garrick Hileman, an economic historian and independent cryptocurrency researcher, told Newsweek in an email, "The relatively modest drop in bitcoin's price is in line with what we saw in some prediction markets following the debate, which shifted a positive 3 percentage points toward a Harris victory. Trump is seen as the better candidate for bitcoin, and the crypto market clearly thinks Harris fared somewhat better last night."
David Gerard, the author of Attack of the 50 Foot Blockchain, echoed the sentiment, telling Newsweek,"I don't think the debate had any particular effect on the price of bitcoin. The key point is that the bitcoin market does not react to market signals like well-regulated high-volume securities or commodities do. It's a small, thinly traded, ill-regulated commodity market. This means that internal manipulations absolutely swamp broader macro signals."
He added, "The price of bitcoin is set by the day's trading, and that's overwhelmingly trades against the Tether and FDUSD stablecoins on Binance. The volumes of just the BTC/USDT and BTC/FDUSD trading pairs on that one exchange swamp all other trading. Binance is where the price is set."
Gerard also said, "Binance is under strong U.S. surveillance with regard to money laundering compliance—but the trading floor is utterly unregulated."
Harris has not spoken publicly about crypto regulation. The Biden administration cracked down on cryptocurrency in 2022, with Biden signing an executive order that specified "a national policy for digital assets across six key priorities: consumer and investor protection; financial stability; illicit finance; U.S. leadership in the global financial system and economic competitiveness; financial inclusion; and responsible innovation," a White House fact sheet said.
The election's effect on the value of cryptocurrency remains debatable. "The election has less importance than many people think," Hileman said.
"While some in the crypto industry see a continuation of Biden's crypto policy as an existential threat, the reality is that crypto has continued to see broadening adoption and significant price gains since the Biden inauguration in January 2021," he added.
Speaking to CNBC earlier in the year, Trump declared his shift on crypto after bitcoin's price rebounded in the wake of scandals and setbacks. He said crypto was becoming increasingly entrenched, adding, "I'm not sure that I'd want to take it away at this point."
In May, Trump doubled down on his pro-crypto stance in a speech to Libertarians, earning applause after vowing to "stop Joe Biden's crusade to crush crypto."
"I will ensure that the future of crypto and the future of bitcoin will be made in the USA, not driven overseas," the former president said. "I will support the right to self-custody to the nation's 50 million crypto holders."
Hileman said: "Regardless of who wins the election, bitcoin is here to stay. However, some companies in the crypto industry, as well as certain crypto tokens, may be in more regulatory trouble if one candidate gets elected versus another."
"There has been a concerted effort by some of these players to back Trump as they believe he will allow for 'light touch' regulation and possibly even help support something like a U.S. strategic bitcoin reserve," he continued. "Whether such a reserve and light touch regulation represents good policy or not is debatable."
Update 9/11/24, 10:51 a.m. ET: This article was updated to include comment from Garrick Hileman.
Update 9/11/24, 12:18 p.m. ET: This article was updated to include comment from David Gerard.
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