Crypto enthusiasts are carefully following the crucial midterm elections in the United States.
Today's crucial midterm election has Americans voting.
Today's elections are for the House, a quarter of the Senate, 31 gubernatorial seats, and a huge number of state and local positions. The outcomes will probably have a substantial impact on the direction of cryptocurrency regulation and on a great number of other choices that may also have an impact on crypto marketplaces.
Compared to past midterm elections, the 2022 midterms are predicted to have a much larger impact on the political climate in the United States. The sharply divided populace is competing for crucial levers of power at all levels of government amid growing inflation, the looming threat of a recession, worries about voting integrity, profound conflicts over identity politics, and pressing social issues.
There is some agreement that a Republican Congress may be more favorable for the industry than continued Democratic control in the House (the Senate, in practice, always requires a 60% supermajority approval vote to surpass the threat of filibuster, is effectively locked in stalemate until one party can break that number or seats). This is despite the fact that U.S. crypto enthusiasts typically reject traditional party distinctions.
Democrats frequently criticize cryptocurrencies and other digital assets in the public eye. One of the Party's most well-known skeptics of cryptocurrencies is senator and 2020 presidential candidate Elizabeth Warren (D-MA), who once compared the technology to "snake oil" in 2021. Representative Brad Sherman (D-CA), who formerly campaigned for the outright outlawing of cryptocurrency before recognizing this fall that that ship had sailed, is maybe the only other Democrat in Congress whose dislike of crypto assets exceeds Warren's.
However, some Democrats support the advancement of favorable crypto regulation and have made an attempt to work with Republican crypto proponents, who are typically more numerous than Democratic advocates. The most noteworthy of them is a piece of bipartisan legislation introduced by Senators Kirsten Gillibrand (D-NY) and Cynthia Lummis (R-WY) (D-NY).
Making Market Predictions
The midterm elections have historically been a catalyst for market gains. Since 1931, election years have seen an average 6% increase in the S&P500's monthly gains between September and December, according to statistics provided by Capital Group, RIMES, and Standard and Poor's.
But this year might be different. Markets dislike ambiguity, so it stands to reason that when voting closes, confusion and false information will proliferate on social media. A record number of election skeptics are also competing for office at all levels of government right now; some have even said they might not accept the results if they lose.
As a result, it would not be unexpected to witness disagreement and confusion over who will lead the next Congress during the coming days. The markets, including those for cryptocurrency, are therefore likely to react poorly to this.
However, it's generally accepted that, at least initially, a decisive Republican victory may be better for the cryptocurrency market. While there are also Democratic Senators that support Bitcoin, prominent Republicans like Pat Toomey (R-Pa.) and Cynthia Lummis (R-WY) have demonstrated a significant interest in doing so. Republicans have just recently come to be seen as the more crypto-friendly party.
Many proponents of cryptocurrency also contend that throughout the past year, the Biden Administration has had a detrimental effect on the industry. President Biden issued an executive order in March titled "Ensuring Responsible Development of Digital Assets" that called for further industry regulation; the White House released its first report on the industry's regulatory framework in September. A number of stringent regulatory actions have been implemented under Biden's administration against a previously unregulated sector, including the Treasury's censure of Tornado Cash, the CFTC's legal action against Ooki DAO, and the SEC's growing inclination to classify tokens as securities.
Additionally, during Biden's leadership, inflation has increased as the Federal Reserve works to reverse the worst consequences of quantitative easing during the COVID-19 pandemic. The Fed's decision to aggressively boost interest rates this year was allegedly motivated by the overly large cash infusion into the economy from emergency spending.
But because of the inevitable market contractions that followed, this has led to its own set of issues. Many investors are counting on a change in government to revive the market because the macroeconomic background continues to appear bleak and a potential recession is imminent.
Points to Take Note
For further reasons, Election Day 2022 might possibly go down in the annals of crypto history.
After days of rumors over liquidity issues, the news that FTX.com would be bought by Binance today sent shockwaves through the whole market. FTT, the native token of FTX, has dropped, and the markets currently look to be experiencing some level of contagion. Today, Bitcoin reached a new yearly low of $17,579 for a brief period of time. Ethereum also had a loss, falling 14% on the day to $1,329.
Accordingly, it appears improbable that anything that occurs over the course of the next 24 hours will somehow cause the market to flip around. That said, the long-term future of the business will be decided by the next Congress, and it could go in a number of very different paths.
At the earliest, results are not anticipated until this evening, but certification of some vote counts could take several days. Readers are urged to confirm any information circulating on social media by consulting many reliable sources before accepting it because such forums can be filled with misinformation.
Disclosure: At the time this article was written, the writers owned a number of different crypto assets, including BTC, ETH, and others.