July 2024: Bitcoin Goes to Washington
Research Team
Last Updated: 8/1/2024 | 12 min. read
Crypto became a more prominent topic in the U.S. presidential election debate in July as the Republican candidate spoke to a major Bitcoin conference, and it was reported that Democrats are considering a “reset” with the industry. The Harris Poll conducted on behalf of Grayscale earlier this year highlighted the importance of the crypto voting bloc, and Grayscale Research is encouraged to see a bipartisan focus on crypto policy issues.
The election campaigns also brought attention to former President Trump’s views on the U.S. Dollar (he may favor weakness to support manufacturing).
Although crypto returns were mixed in July, we see current macro trends as increasingly favorable for the crypto asset class.
Although price performance was mixed in July 2024, the crypto industry seemed to take major steps forward with the launch of spot Ethereum exchange-traded products (ETPs) and the strong endorsement of Bitcoin from the Republican candidate for president, former President Trump. Together, these developments could help expand public blockchain adoption over time.
In addition to the courting of crypto voters, aspects of the Trump Campaign’s policy platform could have implications for Bitcoin’s valuation over time. Both Trump and his running mate, Senator JD Vance, have previously expressed a desire for a weaker Dollar as a way to support domestic manufacturing (a weaker Dollar can make US exports more competitive in international markets).[7] The U.S. Dollar today is highly valued on standard metrics: the real (inflation-adjusted) trade-weighted value of the Dollar is at the 98th percentile of its historical range (Exhibit 3). Bitcoin is an alternative store-of-value asset that competes in this role with the U.S. Dollar. As a result, sustained depreciation in the value of the Dollar may support Bitcoin, as well as other store-of-value assets like physical gold.
Exhibit 3: Dollar’s value at high end of historical range
Exhibit 5: Ethereum drawdown was correlated with tech stocks
Despite range-bound valuations over the last month, we see current macro trends as increasingly favorable for the crypto asset class. Bitcoin has become an important topic in the U.S. presidential election, a future White House may actively support a weaker U.S. Dollar, and the Federal Reserve appears ready to cut interest rates. Taken together, Grayscale Research sees a strong case for Bitcoin retesting its all-time highs later this year.
[1] First seven trading days were business days in range from July 23, 2024 to July 31, 2024
[2] AI-related equities refers to the AI theme as seen in Exhibit 1 (Indxx AI & Big Data)
[8] Source: Dune Analytics. Data as of July 31, 2024.
[11] Source: Bloomberg, Artemis, Grayscale Investments. Data as of July 31, 2024. For illustrative purposes only.
[12] Source: Artemis. Data as of July 31, 2024.
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