ETH Rio 24 - Aaron Stanley | The Impact of the US Presidential Election on the Crypto Market

Transcript

R Stanley brail crypto aort um so I'm going to do this talk in English just because I I rehearsed it in English so it'll be a little easier but

my if you want to talk afterward in Portuguese about it I can do that as well and so Antonio asked me to do a state-of the market talk here to open up and just thinking of what's been happening the last couple of weeks in crypto I like there's no other conclusion I can come to other than like the only thing that really matters in the in the the crypto markets at this point for the next six months is going to be the US presidential election at this point there's just like no way to really deny that you have the Federal Reserve has in the US has signaled that there there probably won't be any more rate increases for the rest of the year that might change but doesn't look likely and it's really going to be the next 6 months just seeing okay what's going to happen in the US now that you

have uh a very political uh crypto's become officially become like a ballot box issue in the United States right and so I'm going to try to tell this uh you know make this case to you essentially and this isn't like an endorsement of any you know political candidate or or policies or anything um or it's not it's not investment advice or anything like that that just trying to lay out a framework for you uh especially since you guys are obviously not from the US and you know it's helpful to have like a gringo here to maybe sometimes explain these things but basically trying to lay out a framework for you to understand like kind what's going on over the next six months in the markets um and I'm going to try to tell this story through uh the lens of these two meme coins here

uh which um so on the one hand you have uh this Maga Trump and then you have Geo Bowden uh which I'm sure you have come across in some capacity um so me a bit more about me I'm founder of Brazil crypto report uh which is a newsletter podcast that just uh focuses on the Brazilian Market really trying to just support what's happening uh provide more content in English about uh what's happening in the market here uh in Brazil I also work at filecoin Foundation as editorial director uh so we are sponsors of this event also so I'll be talking about filecoin tomorrow uh used to work at coindesk used to work at Financial Times uh in Washington bunch of other stuff um so so let's take a quick look at the the price of the Maga coin here

right so you can see over the last week uh the the price of the Maga Trump coin has more than doubled and if we go to the geob Boden coin we can see that it's been sort of slowly chopping downwards right and you know okay these are just meme coins they don't they're not real they're not tied to anything why is this matter well the the point is here I think these the price the price increases and the decreases here really reflect the overall Market sentiment toward the US political situation at the moment we'll we'll explain that here and kind of the core thesis I want to take away here is that it's becoming clear now that the main driver of price action in the market over the last 12 months H and and

over the next six months has been and will be the US political situation basically um this kind of cut off my kind of cut off the bottom of the slide here but uh you can see here that the price action over the last year was really chopping sideways throughout the entire like us summer months uh and it wasn't until about about like October November of last year when we finally got an uptick in the price and that was at the same time as it was it became more clear that the SEC would need to to approve a Bitcoin ETF so recall that there had been these lawsuits with grayscale uh grayscale was suing to allow uh uh the SEC to allow them to convert their gbtc Bitcoin trust

into into an ETF SEC said no so they sued but eventually the SEC lost that case and they basically were forced by the court to approve this ETF there's no way out and once it became widely known that that was that there's no other way that the SEC could get out of this as much as they did not want to approve the ETFs they had to once that became clear you started seeing some of this price action tipping up uh over Christmas and into the new year Etc and then January 10th we have the big date when the ETFs get approved it was a 3-2 decision so Gary Gensler our dear friend he sided with Republicans to vote to approve the Bitcoin ETFs and the two other Democrats on the commission voted to oppose it uh

so we had about like 10 or 11 ETFs launching the next day and then it was Off to the Races as you can see and we over the next month we went up to 6 73,000 new alltime High and um and by any metric these have been a huge success right we've had nearly $300 billion dollar worth of total spot ETF volumes um and some of this was people withdrawing money out of grayscale gbtc and putting it into other products so it's not necessarily all like net inflows uh but you can see by any metric uh these these have been massively successful products and you can see that reflected in the price of Bitcoin uh over the last couple of

months um and further there was an expectation upon the approval of these ETFs and the success of these ETFs that wow we've finally gotten past this psychological barrier of the and Gary Gensler like trying to kill us trying to harass us trying to destroy this industry like they finally approved it and like it's Off to the Races now so there's an expectation that we were going to be getting an ethereum ETF in May and there was you know the Bloomberg analysts and the other kind of professional commentators and handicappers were saying there's 50% chance we're going to be getting an ethereum ETF in May so that was that was the driver for a lot of the price action in March um and now going to shift gears

here a little bit so crypto in the US has has for the most part been framed by industry Advocates as like a nonp part as an issue right it's like there's always been people on you know on in Congress and in presidential administrations who support crypto on the Republic like on the Republican side and there's people who oppose it on the Democrat side there's been people who support it there's been people who oppose it there's things that conservatives like about crypto like the freedom the free markets less Reliance on government there's things that progressives can like about crypto whether it's Financial inclusion Ubi uh you know expanded opportunities things like that like it shouldn't be it's a technology it shouldn't be like a political thing right and that was always how the industry was approaching this uh in Washington and and I think the the Assumption was that you know the

reason that the SEC and like these people in the government keep trying to attack us and keep trying to kill us is that they just don't understand what we're trying to do like it's an education issue we need to keep giving more education we need to keep um you know just talking to people and meeting with people and trying to um you know just inform them what we're trying to do and then once they know what we're trying to do they will all of a sudden turn around and like us right that was the Assumption um but in reality I think people have woken up to the reality that no amount of education is going to um unfortunately persuade these people to like us um on the on the Democrat side of the aisle unfortunately so this is these are some of the headlines over the

last month of some of the kind of enforcement actions that have happened so Unis swap got an enforcement action from the SEC uh consensus uh in the ethereum foundation are being targeted by the SEC uh more kind of crypto money laundering fund coming from the Elizabeth Warren crowd um you know the uh the White House basically vowed to veto piece of proc crypto legislation that was passed last week um so we've arrived at a point where it's like okay unfortunately there's one side that is like they're not willing to play ball at all here like they're not willing to be supportive at all in any sense and people in the industry have kind of woken up to this realization that okay like this is not it's not

going very well right um so about a week ago uh I'm sure most of you are probably familiar with Masari so Ryan celus is this is the CEO of misari and he has been a kind of a vocal like crypto you know proponent ad vate on Twitter over you over the last 10 years um but he actually he was a Biden supporter in 2020 but he was the guy basically over the last 12 months he was the guy that really pioneered this whole like you know single issue voter crypto mindset he's like I like the only issue I'm voting on in 2024 is like whether the candidate is pro crypto or anti- crypto like everything else is irrelevant right and the idea is like the US cannot be seeding leadership and Innovation to

China and other places we need to be keeping these jobs here we need to be keeping Innovation here in the country so he basically went from being a full-on Biden supporter to being kind of you know I don't say red pilled but he ended up just converting and now all of a sudden on May 8th what a week ago he shows up at uh marol Lago in Florida at this uh at this meeting of like Trump nft holders and he's there and he's I don't know how he got in there maybe he bought the nft I guess but he's there and president Trump calls him up on stage just randomly um and then he uh he proceeds to endorse Trump on stage saying and then Trump comes up afterward and he's like you know basically saying

look if you want to support crypto like you got to vote for me there's no other option like I'm the only Pro crypto candidate the other guy's going to kill it and so celus came out with this tweet and it kind of just set the whole crypto Twitter world on fire where people are you know obviously Trump is like a controversial guy people have mixed opinions on him uh but I think a lot of people are kind of realizing like okay like do we really have an option here like if we want to save crypto in this country do we really have an option um and you can see just like this kind of just Unleashed a total kind of mad house of publicity and press around this Politico is like a Washington DC kind of political Insider publication framing this as like oh crypto is

Trump's new weapon against Joe Biden and the campaign you even have Mark Cuban who's a very who's been a lifelong Democrat very like anti-trump guy who in this tweet here you can see he's just blasting the SEC and Gensler and and Joe Biden saying like if you guys lose this election it's because of this um you know the SEC you guys have just been negligent in your your your duties here um so this has really like rattled the cage with a lot of people and it gets to the question of like would would Trump actually would a trump presidency actually be good for crypto right that's people are assuming that yes it would but would it actually be good and the answer is well I mean we don't like actually know he was

President for four years before and it was he wasn't really Pro crypto then uh he was he had um like Brian Brooks who he had appointed as the head of the OC one of the banking agencies very Pro crypto uh I think he's actually an adviser to Hash decks and like velour Capital now if I'm not mistaken uh he was very Pro crypto but on the other hand there was people in Trump's Administration Steve minuchin who's the treasury secretary and then uh like J Clayton the SEC chair who are very anti- crypto uh Clayton famously launched a lawsuit against our friends at Ripple on his last day uh in office uh so that was so it was a very mixed bag right so I think people in the crypto community in

the US have woken up to this you know they're they're wrestling with this reality that okay like we don't really know if Trump would be good for crypto but we definitely know that the alternative is going to be bad for crypto right so um so that begs the question can Trump actually win um and according to some of the polling this is sort of an average composite of the top like five 10 polls and Trump you know it's looks like he's about up by like 1% um so he's doing okay um and then and I won't get into like the nuances of us elections here but basically there's a list of seven states here that you kind of have to win if you

want to win the presidential election and Trump is leading in all these states um and then so going back to tying this all back together here um you know I think we can we can kind of safely say that like kind of tying it back to the the you know the prices of these meme coins here the whole idea was like using these meme coins as a proxy to reflect the industry's sentiment on and bullishness or bearishness on these various presidential candidates and I think we we're at the point now where we can say that these two like this is this this seems to this is going to be this the singular focus of

the industry for the next six months like like this is the only real this presidential election is going to be the only thing that that will be really driving prices in any way like we will not be getting an ethereum ETF approval um fed rates will be you know will be likely there likely won't be any rate Rises until the end of the year uh it's unclear what other types of events might really generate any kind of massive price action in any way um anyway so this is and I realize this is very ironic because we're trying to build in crypto we've we're trying to build sort of like an opt out system from like existing governments and existing systems are trying to build Alternatives and we've arrived at this point where the you like the main factor influencing

the market right now is a US presidential election which is like very you know it's something to think about like we really shouldn't be in this position where this even matters right like the whole point is like we want to be independent of this stuff right so that's what I would I would submit to you as maybe something to take away from this but um I'm hoping that this framing is is has pro has been helpful and maybe understanding a bit of what's been going on uh just over the last if you've been on crypto Twitter at all over the last week people have just been like pulling their hair out over this I mean I think some people are like you know like I don't care you know how good Trump is for crypto like there's no way I'm going to vote for this guy other people are

like I hate the guy but like look if he's going to support crypto I'll vote for him like it's it's complicated but I just wanted to kind of set this framing uh or lay out this framework to you as a and hopefully this is helpful as you um you know think about making you know business decisions or investment decisions Capital allocation decisions uh in the coming months um and um yeah happy that's about all I have um please take a look at at Brazil crypto report if you want to follow me um but happy to chat about any of this stuff afterwards if if you guys are interested or or but whatever else you guys are working on and um hopefully I mean appreciate you guys uh you know taking time to listen

to me here so uh yeah all [Applause] right yeah we've got a couple minutes left so if you guys want if anybody has any burning questions or um so a couple months back uh I remember that Trump during his campaign he explicitly uh was against uh an American cdbc do you view that as a rejection of the technology or the opposite Embrace uh an embracement of the decentralized nature of crypto yeah I I think that's a good

question it's one I probably should have brought up in here um the the cbdc issue has become kind of politi politicized in the US now as well and I I think a lot of this came from actually VI ramaswami if you remember he was he was one of the opponents to Trump in the the the primary elections where he came out very strongly against a cbdc and like Ronda santis of Florida came out against a cbdc and not sure these guys like really fully understand what a cbdc even is to be honest but I think it was more of a way of trying to signal that hey we're like Pro Liberty and we're anti surveillance and we're anti- um you know kind of government intrusion and people's I mean there these these folks are trying to they're trying to draw the

attachment of or make an attachment of cbdcs to basically like a Chinese surveillance State type of model right like a social credit system built in and all this kind of like orwellian dystopian stuff built into it um so it's become a fairly common position on the Republican side of the aisle in the US to be like anti- cbdc and I think there's been some maybe some legislation that's been introduced along those lines as well um but that might become an issue in this campaign um I mean it it I don't think Trump really knows enough about it to he he says like he says a lot of these things but he doesn't really know what he's actually saying he just he's he's a campaigner right he's a sales like he he

says what people want to hear right so um anyway that's my my thoughts on that but any other other questions anybody disagree with my analysis