Election day is here. Here’s what it means for crypto

The United States is voting in crucial midterm elections and crypto fans are watching closely.

Decision 2022

Americans went to the polls today for a critical midterm election.

The House, one-third of the Senate, 31 gubernatorial seats, and countless state and local offices are up for grabs today. The results are likely to have a major impact on the direction of crypto regulation and countless other decisions that could also affect crypto markets.

The 2022 midterm elections are expected to have an outrageous impact on the US political landscape compared to previous midterm elections. Amid rising inflation, ever-present recession fears, concerns about electoral integrity, and deep divisions over identity politics and key social issues, the intensely divided population struggles for crucial levers of power at all levels of government.

Crypto Concerns

While US crypto enthusiasts typically resist traditional party awards, there is some consensus that a Republican Congress could be more optimistic for the industry than continued Democratic scrutiny in the House (the Senate, in practice, always requires a 60% supermajority vote of approval). to the threat of filibuster, and is effectively stuck in a stalemate until a party can break that number or seats).

Democrats tend to be more publicly critical of cryptocurrencies and digital assets in general. Senator and 2020 presidential candidate Elizabeth Warren (D-MA) is one of the party’s most notorious crypto critics. She once compared the technology to “snake oilin 2021. Perhaps the only other Democrat in Congress whose aversion to crypto assets surpasses Warren’s is Representative Brad Sherman (D-CA), who once called for a full ban on cryptocurrency before admitting this fall that that ship had sailed.

Nevertheless, some Democrats are in favor of promoting favorable crypto regulation and have made an effort to work with Republican crypto advocates, who tend to outnumber Democratic advocates. The most notable of these is a piece of bipartisan legislation brought forward by Senators Cynthia Lummis (R-WY) and Kirsten Gillibrand (D-NY).

Anticipate market movements

Markets have historically rallied through the midterm elections. According to data compiled by Capital Group, RIMES and Standard and Poor’s, the S&P 500 has averaged 6% gains between September and December in election years since 1931.

However, this year may be different. Markets don’t like uncertainty, and there is good reason to expect confusion and disinformation to spread on social media as the polls close. An unprecedented number election deniers currently running for office at any level of government; some have even indicated that they can refuse to accept the results if they don’t win.

Therefore, it would not be surprising to see confusion and disagreement over the next few days over who will control the next Congress, and the markets – including crypto – are unlikely to react well to that.

Nevertheless, it is widely believed that a clear Republican victory could be more positive for the crypto space, at least in the short term. Prominent Republican senators like Pat Toomey (R-Pa.) and Lummis have shown a keen interest in supporting Bitcoin, and while there are also pro-Bitcoin Democratic senators, recently Republicans have been recognized as the more crypto-friendly party.

In addition, many crypto enthusiasts argue that the Biden administration has been a negative force in the crypto space over the past year. In March, President Biden signed a Executive order on “Ensuring responsible development of digital assets”, calls for increased surveillance of the industry; the White House published its first crypto regulation framework report in September. During Biden’s tenure, a number of strict regulatory measures have been taken against a previously free-for-all sector, including the Treasury. approval from Tornado Cashthe CFTCs lawsuit against Ooki DAOand the SEC’s increasing willingness to declare tokens effects.

In addition, inflation has soared under Biden’s administration as the Federal Reserve struggles to combat the worst effects of quantitative easing during the COVID-19 pandemic. It is widely argued that the excessive injection of cash into the economy from emergency spending is the main culprit, prompting the Fed to aggressively raise interest rates this year.

However, this has created its own problems as market contracts everywhere inevitably resulted. With the macroeconomic situation still looking weak and a possible recession looming, many investors have pinned hopes on a change of government to turn the market around.

What to watch out for

Election Day 2022 may enter the crypto history books for other reasons as well.

The entire market was rocked today by the news that FTX.com would be acquired by Binance after days of speculation over liquidity issues. FTX’s proprietary token, FTT, has collapsed, and an unprecedented level of contagion appears to be creeping through the markets right now. Bitcoin set new yearly lows today, briefly touching $17,579. Ethereum also suffered, falling 14% on the day to USD 1,329.

Therefore, it seems unlikely that anything that happens in the next 24 hours will miraculously change the market. But that doesn’t change the fact that the next Congress will be critical in deciding the long-term future of the industry, and it could go in several very different directions.

Results are not expected until late tonight at the earliest; however, some vote counts may take several days to certify. Since social media is rife with misinformation, readers are encouraged to confirm any results circulating on such platforms by consulting multiple reputable sources before accepting any potential misinformation.

Disclosure: At the time of writing, the authors of this piece owned BTC, ETH, and several other crypto assets.