HTX Ventures Latest Research Report | The 2024 U.S. Election from a Crypto Perspective: A Potential Turning Point from Strict Regulation and Suppression to Support for Innovation
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HTX Ventures Latest Research Report | The 2024 U.S. Election from a Crypto Perspective: A Potential Turning Point from Strict Regulation and Suppression to Support for Innovation
If Trump wins the election, a clearer and more relaxed regulatory environment is expected, which would support the incubation and growth of cryptocurrency startups.
Navigating Web3 tides with focused insights
Since its debut, Bitcoin has evolved into a pivotal issue in the 2024 U.S. presidential election after spanning three electoral cycles. As Satoshi Nakamoto’s vision outlined in the whitepaper gains broader recognition, Bitcoin supporters have formed a significant and influential voter bloc within American politics. This article analyzes the multiple factors behind the rising importance of Bitcoin and cryptocurrencies in the election, including inflation eroding real wages, challenges to the dollar’s global dominance, growing voter interest in crypto, and the incumbent administration’s regulatory approach toward the crypto industry.
This article is written by the research team under HTX Ventures. It further explores the divergent stances of presidential candidates toward cryptocurrencies and how these positions may shape future policy directions and market expectations. Additionally, it discusses prediction markets—particularly Polymarket’s role in the election—and potential innovations in this space, as well as how the election could impact macroeconomic liquidity in the cryptocurrency market.
Ultimately, the article forecasts the potential impact of the election outcome on crypto enterprises. If Trump wins, a clearer and more relaxed regulatory environment is expected, which would facilitate the incubation and growth of crypto startups, potentially open pathways for crypto companies to go public, ensure exit opportunities for traditional investment institutions, enhance wealth effects, improve financing conditions, accelerate DeFi integration into mainstream finance, and drive innovation and development in the BTCFi sector.
Background: Cryptocurrencies as a Key Election Issue
The Significance of Bitcoin to the United States
Strengthened Demand for Inflation Hedging
A Forbes survey reveals that, after adjusting for inflation, average American wages have seen little real growth since the mid-1980s. Adjusted for inflation, today’s average hourly wage in the U.S. has roughly the same purchasing power as in 1978. This stagnation has exacerbated wealth inequality: the upper class has seen substantial wealth growth through ownership of fixed assets, while the working class continues to lose ground.
Since the 2008 financial crisis, Bitcoin has increasingly been viewed as a potential tool to hedge against inflation and economic uncertainty, offering the middle class hope for financial independence. Its decentralized nature and fixed supply make Bitcoin an alternative asset insulated from government and central bank intervention. While the U.S. dollar remains the world’s reserve currency, growing investor demand for value-preserving assets has amplified Bitcoin’s appeal as an effective inflation hedge—especially for the financially strained working class.
Regardless of whether Trump or Kamala Harris wins the upcoming presidential election, U.S. fiscal policy is likely to result in larger budget deficits. According to projections by the Congressional Budget Office, the federal budget deficit will average 6.2% of GDP over the next decade. If Trump extends his 2017 tax cuts and further reduces rates, the deficit could rise to 7.8% of GDP. In contrast, Harris plans to raise the corporate tax rate to 28%, but her other reform proposals could still push the deficit to 6.5% of GDP.
https://www.grayscale.com/elections
Over the past 25 years, U.S. federal debt as a share of GDP has surged from 40% to 100%, and over the next 10–30 years, it could climb to between 124% and 200%. The upcoming presidential election may trigger a so-called “Minsky moment”—when bond markets recognize the severity of the debt burden and demand higher yields to compensate for increased funding risks. Such a scenario could lead to a bond market crash and spark a financial crisis.
Whether through Trump’s tax cuts or Harris’s proposed tax increases, both paths risk exacerbating America’s deficit and debt burdens, increasing the likelihood of financial market instability. Options for addressing high debt levels are limited, and using inflation to erode debt value may become the only viable path for the U.S. government. However, inflation disproportionately harms the working class by reducing their purchasing power and worsening wealth inequality.
Notably, pending congressional approval of Bitcoin-related legislation could offer a new solution to America’s debt challenges. These bills aim to integrate Bitcoin into the broader financial system, potentially attracting massive private and institutional capital to help stabilize the U.S. debt structure and even contribute to global financial stability. As a decentralized and scarce asset, Bitcoin offers governments and investors a strategic tool to hedge against inflation and financial risks, particularly under mounting debt and inflationary pressures.
Reinforcing the Dollar’s International Influence
Stablecoins, among the most popular crypto products today, have become a focal point in policy discussions, with several related bills currently under review in Congress. A key driver of this debate is the recognition that stablecoins can help maintain the dollar’s international influence amid signs of weakening dominance as the global reserve currency. Currently, over 99% of stablecoins are denominated in U.S. dollars, far surpassing the euro—the second most used denomination—at just 0.20%. The widespread use of dollar-denominated stablecoins strengthens the dollar’s dominance in digital asset markets and provides the U.S. with a new avenue to maintain its leadership in the global financial system.
Beyond enhancing the dollar’s global reach, stablecoins also have the potential to strengthen 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 demonstrates that stablecoins not only reinforce the dollar’s global dominance but also serve as a vital component of the U.S. financial system by absorbing large volumes of Treasuries and providing additional liquidity support to the economy.
Rising Voter Interest in Cryptocurrencies
In a national poll conducted by Grayscale on behalf of Harris, approximately half of potential U.S. voters indicated they would prefer candidates who express positive views on cryptocurrencies over those indifferent to the technology.
Moreover, voter interest in crypto has significantly increased in swing states. In two critical battleground states—Pennsylvania and Wisconsin—Google search interest in cryptocurrencies has risen to fourth and fifth place respectively since the 2020 election, while Michigan ranks eighth nationwide.
Biden Administration’s Regulatory Crackdown on Crypto Firms
Shortly after taking office, the Biden administration began tightening cryptocurrency regulation, aiming to establish a stricter framework. Measures included filing securities charges against Ripple, imposing enhanced tax reporting requirements on crypto firms and Bitcoin miners, and levying capital gains taxes. After the collapse of FTX, the government intensified legal actions against major crypto companies and achieved several legal victories. For example, Changpeng Zhao, former CEO of Binance—the world’s largest cryptocurrency exchange—was sentenced to four months in prison due to U.S. and international litigation. Subsequently, the U.S. Securities and Exchange Commission (SEC) sued Coinbase, accusing it of operating an unregistered securities trading platform. A successful lawsuit would pose a significant threat to Coinbase’s business model. Other companies facing similar charges include the crypto exchange Kucoin.
Crypto Companies’ Political Donations Play a Central Role
In 2024, cryptocurrency companies have emerged as major political donors in the U.S. Coinbase and Ripple are now the largest corporate political contributors this year, accounting for nearly 48% of total corporate donations. Fairshake, a Super Political Action Committee (PAC) founded in 2023 and led by former New York Governor’s aide Josh Vlasto, has raised over $200 million to support pro-crypto candidates and defeat skeptics. It has become the highest-spending PAC in this election cycle, backed by companies such as Coinbase, Ripple, and Andreessen Horowitz.
These funds not only influence presidential candidates’ policies but also drive favorable legislative outcomes in Congress. The crypto industry has thus moved from behind the scenes to the forefront of American politics.
A notable case occurred in March, when progressive Democratic star Katie Porter raised over $30 million for the California Senate race and was initially favored to win. However, because she followed Elizabeth Warren’s political stance and previously aligned with Harris on banking regulation, Fairshake labeled her an "anti-crypto ally." During California’s primary elections, Fairshake spent over $10 million attacking Porter, undermining her support among younger voters. Through Hollywood banner ads and targeted critiques, Fairshake accused Porter of misleading voters to back big-corporate legislation, effectively neutralizing her fundraising momentum. She ultimately finished behind fellow Democrat Adam Schiff and failed to advance to the general election.
This phenomenon has prompted many Democratic candidates to add dedicated pro-crypto sections to their campaign websites, signaling to crypto PACs in hopes of securing financial backing. Crypto PACs have clearly influenced candidate positioning.
Impact of the Election
Policy Platforms of the Two Major Campaigns
Harris
Harris has made limited public statements on crypto policy, merely expressing her intent to “encourage innovative technologies like artificial intelligence and digital assets, while protecting consumers and investors.” To address unexpectedly low support among Black male voters, she recently unveiled a series of economic security initiatives, including a promise to create a crypto regulatory framework to protect Black men’s crypto investments. However, this framework targets only Black voters and lacks detailed regulations or clear policy positions, leading the crypto community to criticize it as insincere—a mere tactic to win votes rather than genuine support for the industry.
The current Biden/Harris administration has maintained a confrontational stance toward the crypto industry, filing multiple lawsuits, restricting traditional banking services for crypto firms, blocking bipartisan legislation, and continuing to consider imposing capital gains taxes on crypto transactions. Although Harris’s crypto policies might be friendlier than Biden’s and could improve the regulatory climate, her positions remain cautious on critical issues such as taxation, Bitcoin mining, and self-custody—falling far short of Trump’s pro-crypto stance.
Trump
The Republican Party has long emphasized individual freedom, aligning ideologically with the decentralized principles of cryptocurrency. The Republican National Committee’s official platform includes support for crypto, stating that Trump will defend the right to Bitcoin mining and “ensure every American the right to hold their digital assets personally and transact without government surveillance or interference.” In contrast, Democrats tend to favor expanded government authority and regulation, creating ideological friction with the crypto community.
Trump has shown strong interest in the digital asset industry, claiming he wants to make the U.S. the “global capital of cryptocurrency and Bitcoin.” He supports Bitcoin mining and has pledged to protect self-custody rights. Additionally, Trump once bought hamburgers with Bitcoin for customers during a campaign event and publicly criticized the SEC’s hardline stance on crypto, promising to appoint a crypto-friendly chair if re-elected. Trump has also launched his own decentralized finance (DeFi) project—World Liberty Financial.
Trump has proposed several crypto policy initiatives, including:
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Establishing a Government Bitcoin Reserve: Trump stated his administration would “retain 100% of all Bitcoin currently held or acquired in the future by the U.S. government,” forming the “core of a national strategic Bitcoin reserve.” As of October 2023, the U.S. government is estimated to hold over $5 billion worth of Bitcoin, mostly seized through criminal investigations. However, how these reserves would be used, their practical feasibility, and whether they would gain broad acceptance within the crypto industry remain unclear.
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Creating a Crypto Advisory Committee: At an event in Nashville, Trump proposed forming a “President’s Advisory Committee on Bitcoin and Cryptocurrency,” to be composed of individuals who “love the industry” rather than those who “hate it,” to shape regulatory rules.
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Blocking the Fed from Launching a Digital Currency: While many countries are advancing central bank digital currencies (CBDCs), the idea faces strong resistance within the U.S. crypto community. Although the Federal Reserve has not decided whether to launch a digital dollar, it released a report in January 2022 discussing potential costs and benefits. Trump has repeatedly opposed the concept, calling it a “major threat to freedom.” In May 2024, the House passed a bill banning the Fed from creating a CBDC, though the legislation still faces a long path to becoming law.
It should be noted that although Trump supports cryptocurrencies, his tariff policies could introduce economic uncertainty, whose long-term impact on markets and the crypto industry remains to be seen.
Potential for a “Divided Government”
Currently, unless one party secures control of both chambers of Congress and the presidency, a period of political instability appears almost inevitable.
As of October 25, Polymarket data shows varying probabilities of different parties winning the presidency, Senate, and House. The only specific outcome with high probability is Republican control of the Senate. A “divided government”—where the presidency and Senate are controlled by different parties—is also highly likely. The last divided government occurred during Obama’s tenure, while neither Biden nor Trump’s terms featured such a configuration.
This political setup often leads to legislative gridlock, requiring compromise between the president and Senate on major laws and nominations. Conversely, if Republicans achieve a full sweep, they could pass new legislation within three to six months—an outcome favorable for the crypto market, as Republicans generally advocate for looser crypto regulations.
On Wednesday, September 25, Congress passed a temporary spending bill to fund government operations until December, temporarily avoiding a shutdown. This bill also delays final spending decisions until after the November 5 presidential election. In other words, from December through January 3, when the new Congress convenes, fiscal decision-making will be constrained. This means presidential influence on fiscal policy may be limited during the transition period until the new House takes office and passes a formal budget.
SEC Leadership Likely to Change
Since Gary Gensler became SEC Chair, his aggressive regulatory approach has sparked strong backlash from the crypto community. While he has achieved some success in cracking down on illegal securities offerings, his overly strict enforcement has drawn widespread protests from crypto companies.
Trump has publicly stated that if re-elected, he would “fire” Gensler and push the SEC to adopt a more innovation-friendly posture toward crypto. Traditionally, when the White House changes hands, the SEC Chair resigns. It would not be surprising if a Harris administration adopted a similarly conciliatory stance to win industry support. Therefore, regardless of whether Harris or Trump wins, the SEC leadership is likely to undergo significant change.
Macro Liquidity: Volatility Inevitable, Degree of QE Is Decisive
When the Federal Reserve cuts interest rates and global capital liquidity surges, Bitcoin (BTC) prices often rise sharply, indicating that macro liquidity remains a decisive factor for the crypto market.
In 2020, the Trump administration responded to the pandemic by launching an unlimited quantitative easing (QE) program, injecting massive liquidity into the crypto market. On March 15, 2020, the Fed lowered the target range for the federal funds rate by 1 percentage point to 0%–0.25% and initiated a $700 billion QE program. Later, the Fed removed QE limits entirely, purchasing assets “as needed,” ushering in unlimited QE and flooding the crypto market with liquidity.
On October 21, 2024, at an event in Lancaster, Pennsylvania, Trump reiterated that if re-elected on November 5, he would significantly lower U.S. interest rates. This pledge could again fuel rallies in Bitcoin and other crypto assets, especially in an environment of heightened liquidity.
How the Election Will Impact Crypto Startups
Web3 Prediction Markets Achieve Absolute Dominance Over Web2 Competitors
Since its launch in 2020, Polymarket has rapidly risen to become a leader in the field, capturing 80% of the total betting volume for the U.S. presidential election. It is rare for a blockchain-based application like Polymarket to dominate an existing market and achieve the highest market share. Polymarket allows users to predict and bet on future outcomes across sports, politics, business, and science. It first gained major attention during the 2021 U.S. election, facilitating 91% of total bets amounting to $3.5 million.
Polymarket has faced numerous challenges, including a $1.4 million civil penalty settlement with the U.S. Commodity Futures Trading Commission (CFTC). Since then, Polymarket has ceased formal operations in the U.S., and American users are geo-blocked from accessing the site. CFTC Chair Rostin Behnam continues to warn that if Polymarket establishes a sufficient “footprint” in the U.S., it must register its derivative contracts or face enforcement action.
Prediction markets are gradually evolving into broader financial tools, moving beyond mere speculation. With Polymarket’s expansion, its influence now extends to public opinion, financial hedging, and corporate decision-making.
How Prediction Markets Work
Prediction markets are derivative markets where participants bet on event outcomes. These are typically binary options—for example, a market on “Will a spot Bitcoin ETF be approved?” would be resolved as “Yes” or “No.” The price distribution of “Yes” and “No” shares is determined by market participants’ predictions and bets, summing to $1—or slightly above.
At expiration, each share converges in value to either $0 or $1. Successful participants receive $1 per share; incorrect ones get $0. This determines profits and losses.
Outside crypto, offshore centralized providers often cap bets on certain outcomes, similar to sports betting. This restricts individuals from fully leveraging their insights, and final outcomes are often controlled by centralized operators. On-chain prediction markets eliminate these barriers—smart contracts and decentralized ledgers create transparent, global markets, ensuring fairness and preventing manipulation.
Polymarket uses a hybrid decentralized order book: user orders are sent to Polymarket’s operator, matched off-chain, and executed via a custom trading contract that performs atomic swaps (settlements) between binary outcome tokens and collateral assets (ERC20) based on signed limit orders.
Beyond binary markets, Polymarket also offers categorical and scalar markets. Categorical markets allow bets on multiple outcomes, each resolving to $1 or $0 depending on the actual result. For example, a market predicting the 2025 NBA champion might list teams like the Celtics, Thunder, Knicks, and Nuggets. With the regular season just beginning, users can bet on multiple teams simultaneously. Scalar markets function differently, with payouts and settlements based on where the final outcome falls within a predefined range.
Product Evolution of Prediction Markets
Augur was one of the earliest blockchain-based prediction markets. Its trading volume reached $400,000 in 2018—a significant figure given the state of on-chain activity at the time—demonstrating strong demand for on-chain prediction markets. However, due to complex mechanisms and malicious attacks, Augur failed to sustain a long-term user base.
Unlike Polymarket, Augur allowed anyone to create markets by staking REP (Augur’s governance token). Under Augur’s mechanism, if a market’s components—such as definition, expiration, or resolution criteria—were flawed, the market would fail. Attackers exploited this by creating faulty markets, deliberately causing them to fail and profiting from the process. Moreover, Augur’s permissionless market creation led to controversial markets, such as “When will a particular singer die?”
To prioritize user acquisition during initial development, Polymarket centralized market creation internally. By curating easy-to-understand, socially beneficial, and ethically uncontroversial markets, Polymarket ensured a stable early user base. This partial centralization strategy facilitated smooth user onboarding, while maintaining transparency and traceability in core trading functions.
Prediction Markets Break Into the Mainstream
According to the efficient market hypothesis, asset prices in capital markets quickly and fully reflect all available information. Based on this, prediction markets are inherently efficient and capable of correcting inaccurate forecasts—resolving market inefficiencies—to produce accurate predictions.
Polymarket’s founder stated the platform was created to combat misinformation during the pandemic. Today, Polymarket successfully transforms speculative demand into a tool for gathering public sentiment. It accurately predicted Kamala Harris’s likely nomination as the Democratic candidate and J.D. Vance’s selection as Trump’s running mate—forecasts captured before official announcements. Polymarket is now widely adopted by mainstream media outlets—even traditionally crypto-skeptical Chinese media—as an alternative news source. Bloomberg’s trading terminal began integrating Polymarket data into its interface in August 2024.
Polymarket is also integrating with content platforms. On July 30, the prominent subscription platform Substack launched embedded prediction market features powered by Polymarket, marking the debut of “The Oracle by Polymarket.” Within The Oracle, readers access insights and analysis drawn from thousands of active markets on Polymarket. The Oracle regularly compiles notable markets, key statistics, and in-depth analyses of trending topics.
Future Directions for Prediction Markets
Backpack Exchange has introduced prediction tokens for the U.S. election, while SynFutures and dYdX have launched leveraged trading products tied to the election, incorporating advanced order types (e.g., limit and stop-loss orders) to help users manage risk. Leveraged trading enables users to control larger positions with smaller capital, amplifying potential profits. dYdX focuses specifically on perpetual prediction markets for Trump, allowing traders to take long or short positions with up to 20x leverage. This flexible structure enables users to profit from market volatility, even over short periods.
Overall, combining leveraged trading with prediction markets remains complex for average users and is better suited for professional traders.
Trump’s Victory Could Spur Crypto Company Incubation and IPOs in the U.S.
Under a Trump administration, a clearer regulatory framework and more lenient environment would reverse the current trend of crypto companies fleeing the U.S. and blocking American IP addresses. According to Bloomberg, several crypto-related firms—including Circle Internet Financial, Kraken, Fireblocks, Chainalysis, and eToro—are likely to go public within the next one to two years, with other qualified crypto enterprises expected to follow standard IPO procedures.
During Biden’s term, the current SEC Chair Gary Gensler’s strict regulatory posture has resulted in very few crypto IPOs in recent years, making it harder for crypto firms to secure funding from mainstream traditional funds. Recall that Coinbase’s landmark 2021 IPO generated significant wealth effects, prompting many traditional funds to establish crypto divisions. Yet, in Forbes’ 2024 Midas List, the only crypto-related entry remains Coinbase.
DeFi and BTCFi Stand to Benefit First
Although Trump’s own DeFi project, World Liberty Financial, sold only 4.3% of its WLFI tokens and has been criticized for lacking utility, it nonetheless signals his interest in decentralized finance (DeFi).
Within DeFi, BTCFi is more likely to build consensus, gain legitimacy, and establish a stronger foundation—its development trajectory is relatively certain.
BTC is currently the greatest common denominator among the crypto industry, Wall Street, and the SEC. The core of BTCFi lies in leveraging BTC—through staking, lending, trading, and derivatives—all forms of leverage. Over time, BTCFi is expected to grow multiplicatively relative to BTC’s intrinsic value, mirroring the performance patterns of other major asset classes. However, this evolution requires a prolonged period of favorable external conditions. A Trump victory in the upcoming election could accelerate this process.
Crypto firms developing BTC-based financial tools would benefit from encouragement and a more accommodating regulatory environment, solidifying BTC’s status as a foundational asset. Meanwhile, innovation in BTCFi would be developer-driven, enabling breakthrough applications leveraging Bitcoin’s programmability. For example, the 2025 Bitcoin upgrade—anticipated as the first major upgrade since Taproot in 2021—could enable OP_CAT. If OP_CAT passes, developers could use native Bitcoin programming languages like sCrypt to build decentralized, transparent smart contracts directly on the Bitcoin mainnet. sCrypt is a TypeScript framework for writing smart contracts on Bitcoin, allowing developers to use TypeScript—one of the most popular high-level programming languages. Additionally, current Bitcoin Layer 2 solutions could evolve into zk rollups, potentially expanding the total BTCFi market to over ten times the current BTC market cap.
Several projects are already exploring OP_CAT and sCrypt development. Fractal Bitcoin, a parallel chain to Bitcoin, already supports OP_CAT and has launched the CAT protocol. Projects currently using Bitcoin scripting—such as Babylon, a restaking protocol, and Shell Finance, a stablecoin lending platform—are planning to develop fully decentralized and more complex on-chain functionalities once OP_CAT is live, leveraging Bitcoin’s consensus for maximum security.
About HTX Ventures
This article was written by the research team under HTX Ventures. HTX Ventures is the global investment arm of Huobi HTX, integrating investment, incubation, and research to identify the world’s most talented and innovative teams. As an industry pioneer with over 11 years of blockchain experience, HTX Ventures excels at identifying cutting-edge technologies and emerging business models. To foster ecosystem growth, we provide comprehensive support to portfolio projects, including fundraising, resources, and strategic guidance.
HTX Ventures currently backs over 300 projects across multiple blockchain sectors, with select high-quality projects already listed on Huobi HTX. Additionally, as one of the most active FOF funds, HTX Ventures invests in 30 top-tier global funds and collaborates with leading blockchain funds such as Polychain, Dragonfly, Bankless, Gitcoin, Figment, Nomad, Animoca, and Hack VC to jointly build the blockchain ecosystem. Visit us.
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