Crypto Market on the Brink: How the 2024 Presidential Election Could Impact Your Altcoin Portfolio

11/04/2024 22:41

As the 2024 presidential election looms, the crypto world braces for a potential shake-up. With both candidates presenting vastly different stances on cryptocurrency regulation, here’s how to prepare your portfolio.

With election day approaching, the crypto market is on edge as the potential outcomes for altcoins, meme coins, and Bitcoin hang in the balance. Both Donald Trump and Vice President Kamala Harris represent divergent policy paths on cryptocurrency regulation, leaving many investors to wonder: which outcome will benefit their portfolios most?

Donald Trump has presented himself as a pro-crypto candidate, advocating for policies such as adding Bitcoin as a strategic reserve—akin to how the U.S. holds gold—and pushing for “light-touch” regulation. However, it’s worth noting Trump’s recent change of heart; just a few years ago, he dismissed crypto as a scam.

Meanwhile, the Biden-Harris administration has largely been perceived as anti-crypto, with several industry insiders noting that Harris has yet to voice any stance that distances her from the current administration’s skepticism. This has fueled speculation that a Harris win might continue the regulatory scrutiny the industry has seen in recent years.

Fortune’s recent analysis shows stock markets hinting at a possible win for Kamala Harris, which could imply a continuation of the Biden administration’s policies. However, it’s not a done deal—polls show a tight race, and historical patterns suggest Trump’s rising chances, which could drastically reshape market expectations.

In previous election cycles, positive market performance in the three months before election day has typically favored the incumbent party. With the market seeing record highs since Harris’s entry into the race, history suggests the Democratic side might have an edge. Yet, Trump’s favorability has seen a recent uptick, showing how quickly momentum can shift.

The stakes for altcoins and meme coins are higher than ever. Many analysts suggest that if Trump wins, we could see a shift from meme coins to utility-driven altcoins as regulatory clarity improves and investors feel more confident. Sectors traditionally associated with the GOP—like materials and defensives—could benefit from potential deregulation.

Conversely, a Harris victory might keep meme coins in play, as uncertainty over regulatory treatment could steer investors toward lower-stakes, speculative plays. The contrasting policy approaches between Trump and Harris indicate that the next administration could dramatically impact how different crypto sectors perform.

With so much at stake, many traders are setting up short and long positions to hedge against election results. Here’s a common approach many are taking:

If Markets Rally Pre-Election: A short position could be advantageous, as a “buy the rumor, sell the news” scenario might follow the election results. Bitcoin resistance is currently around $71,500, where some traders plan to open a 3x–4x short position with tight stop losses.
If Markets Decline Pre-Election: In this case, traders could prepare for a 3x–4x leverage long position, especially if Bitcoin sees a dip to the $66,000 range, anticipating a market bounce if Trump secures a favorable outcome.

Regardless of which candidate wins, investors are gearing up to buy strong fundamentals-based altcoins. If Trump wins and regulatory clarity improves, we may see coins like Solana, Cardano, Polygon, Filecoin, and Near Protocol rally. Each of these projects has been flagged by the SEC, suggesting they may be undervalued due to regulatory concerns rather than intrinsic issues. With clarity, these projects could rebound strongly.

For those planning to go long on altcoins, the optimal entry points could come after Bitcoin’s dominance breaks a significant trend line. Currently, Bitcoin has been on an upward trend for months, so altcoins may not see major inflows until Bitcoin’s dominance softens—a pattern many analysts anticipate for late December or early March.

With November 5th’s results likely to have a profound effect on the crypto market, staying flexible is key. Rather than jumping in with both feet, many investors are dollar-cost averaging and closely watching the market for post-election opportunities. There’s a bullish scenario for Bitcoin and select altcoins if Trump wins, and a potentially bearish outlook if Harris takes the lead.

In the months ahead, tax policy for 2025 could also play a role, with many financial advisors already discussing tax mitigation strategies, depending on the outcome.

As the election approaches, uncertainty prevails. For crypto investors, now is the time to hedge positions and prepare to pivot based on November 5th’s outcome. Whether Trump’s pro-crypto stance or Harris’s more regulated approach prevails, the decisions made today could shape portfolios for months to come.