How Biden ending his re-election campaign could impact bitcoin

The Democratic presidential candidacy is up in the air.   

After a few weeks of the Washington DC rumor mill swirling around Joe Biden — whether or not he should move forward with his candidacy — the president announced that he is not going to seek re-election in November. 

Bitcoin’s immediate reaction was negative, shedding roughly 2.5%. But it didn’t stay that way. We’re up slightly on the day, and still ahead by around 8% over the last week. ETH saw a similar response, though it’s now hovering around $3,400.

“This is [net or net-negative] for BTC, short term, as Trump was hoping Biden would stay in the race, as he would be an easy opponent to beat in November,” Rich Rosenblum, co-CEO of GSR, told me. He added that Trump’s expectations were clear in his choice of vice president. 

Read more: Empire Newsletter: Why bitcoin fell after Biden’s exit

“The fact that Biden stepped down and a younger candidate can step in is a negative for Trump. This is why BTC initially sold off. Then an hour later, Elon showcased ‘laser eyes,’ in his new X profile photo, which is what buoyed the price of BTC back up to $67,500… A reduction in probability that the next president of the United States will be a bitcoiner was equally offset by more open conviction for BTC from the richest and arguably most influential man in the world, Elon Musk,” he continued.

But this might not hurt bitcoin too much, he said. Crypto is currently a partisan issue, given the Republican support. But it might not stay that way. 

“While it is a bit worse for BTC prices that Trump’s probabilities have notched down, a tougher fight might actually behoove BTC, since in a tougher fight, the Democrats will pull out all the stops in order to win. One obvious one is to pull a full 180, and join the ‘Crypto Army’. The cat is out of the bag on BTC being popular, especially with younger voters,” he added. 

Former President Trump will be in attendance at Bitcoin 2024 in Nashville later this week and plans to speak on stage. Rosenblum believes that Musk’s laser eyes could be a sign that he too plans to attend the event. Musk becoming more crypto-oriented could be a “very bullish development.”

“Elon is not only the #1 KOL, he is also one of the world’s greatest technologists, who can be influential in driving use cases for BTC and crypto more broadly. His comments about DOGE being the currency on Mars has caused massive swings historically. If he has more serious web3 ideas, like enabling more functionality for crypto on X, this could be even more powerful than his political influence,” Rosenblum said.

It’s not just politics driving the market this week, there’s also the expectation the US Securities and Exchange Commission is going to give the much-anticipated ETH ETFs the green light to launch as well.

”The long-term impact of a broader investor audience getting exposure to crypto use cases beyond digital gold and the policy shift that underpinned the approval is likely to bring tailwinds to ETH and the broader industry for a long time,” David Lawant, head of research at FalconX, wrote in a research note.

‍Bitfinex analysts wrote that “given the uncertainty brought upon by an unclear Democrat candidate, we can expect a news driven and volatility filled week with elections, Ethereum ETF launch and Mt. Gox creditors receiving coins being some of the main talking points.”

A longer version of this article appeared in the Empire newsletter Monday morning. Sign up here to never miss an edition. 

---

Get the news in your inbox. Explore Blockworks newsletters:

• Blockworks Daily: The newsletter that helps thousands of investors understand crypto and the markets, by Byron Gilliam.
• Empire: Start your morning with the top news and analysis to inform your day in crypto.
• Forward Guidance: Reporting and analysis on the growing intersection of crypto and macroeconomics, policy and finance.
• 0xResearch: Alpha directly in your inbox. Market highlights, data, degen trade ideas, governance updates, token performance and more.
• Lightspeed: Built for Solana investors, developers and community members. The latest from one of crypto’s hottest networks.
• The Drop: For crypto collectors and traders, covering apps, games, memes and more.