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Who Were the 2024 Election's "Crypto Voters" and Their Impact?

2024-12-09

In last month's election, a remarkable phenomenon emerged. One of the most significant victors was not a candidate on the ballot but rather something found within a crypto wallet. During the 2024 campaign cycle, cryptocurrency companies made a substantial impact by contributing one-third of all direct corporate contributions to super PACs. This investment paid off handsomely as 85% of the congressional candidates supported by the industry emerged victorious in their races.

Uncovering the Crypto Influence in Elections

Understanding the Crypto Phenomenon

Cryptocurrencies are digital assets that operate independently of a country or financial institution. They rely on a blockchain, a secure and decentralized virtual ledger that meticulously records every transaction. Industry research indicates that those who own cryptocurrency are typically young and racially diverse. They view cryptocurrency as a means to gain more control and freedom over their financial lives. Overall, they advocate for clearer regulations and seek candidates who are open to emerging technologies.

For instance, Brad Garlinghouse, the CEO of Ripple, whose cryptocurrency XRP is one of the largest in the world, emphasizes the significance of this industry. He believes that those who underestimate the passion of crypto enthusiasts are missing a crucial aspect. Cryptocurrencies offer a unique financial alternative that attracts a specific demographic.

The voter base for cryptocurrencies is on the rise and presents an opportunity. While they support policies favorable to the industry, crypto voters do not have a unified stance on which party will best serve their interests. Most research shows a near-even split between support for the Republican and Democratic parties.

The Role of Advocacy Organizations

To assist voters in making informed decisions, the advocacy organization Stand With Crypto assigns grades to politicians based on their statements about the industry. President-elect Donald Trump received an A grade. Initially critical of bitcoin in 2021, Trump has since embraced the industry. He even announced his new cryptocurrency business, World Liberty Financial, and appointed David Sacks as his "White House A.I. & Crypto Czar," highlighting his intention to boost the crypto sector.

On the other hand, John Reed Stark, a former chief of internet enforcement at the Securities and Exchange Commission, is critical of crypto. He understands the reasons behind people's interest but maintains that cryptocurrency is dangerous. He believes that the financial crisis led to a lack of trust in institutions, which contributed to the appeal of cryptocurrency.

However, the industry was not straightforward in making crypto connections in its ads. For example, Democrat Rep. Katie Porter in California was criticized for cryptocurrency mining in a letter she co-signed with a known crypto skeptic. But during her Senate primary, every negative ad against her was funded by crypto, highlighting the complex nature of the crypto influence in elections.

The Crypto Industry's Campaign Spending

In this year's election, the crypto industry supported 29 Republicans and 33 Democrats. The largest crypto industry super PAC, Fairshake, started in part by Ripple, spent $131 million on ads supporting pro-crypto candidates. It also has an additional $103 million reserved for pro-crypto candidates in the mid-term elections two years from now. Interestingly, none of the television ads paid for by Fairshake this year mentioned crypto, even those against Porter.

Ripple CEO Garlinghouse argues that even without direct mention of crypto, the commercials were still educating voters. But Stark is not convinced, stating that elected officials were clear in their support of crypto, and it remains to be seen if voters truly understood the implications.

The video above was produced by Brit McCandless Farmer and edited by Scott Rosann.

On Friday, Wall Street's indexes achieved record highs, and futures markets have since steadied. Technology stocks continued their upward trajectory, despite stronger-than-expected nonfarm payrolls data failing to deter expectations of a December rate cut. S&P 500 Futures are currently at 6,098.25 points, with Nasdaq 100 Futures flat at 21,651.75 points as of 18:21 ET (23:21 GMT). Dow Jones Futures are also flat at 44,700 points.

Geopolitical Uncertainty in Syria

Rebel forces have ousted President Bashar al-Assad and taken control of Damascus, ending 13 years of civil war. This major regime change has left investors waiting to see what it will entail for geopolitics in the Middle East. Media reports suggest that al-Assad has landed in Moscow, and Israeli forces have entered Syria. The situation in Syria is adding an element of uncertainty to global markets.

Investors are closely monitoring these developments as they could have significant implications for various asset classes. The uncertainty surrounding Syria's future may lead to increased volatility in financial markets in the coming weeks and months.

Moreover, the outcome of this geopolitical event could also influence the Federal Reserve's decisions regarding interest rates. With the focus on consumer price index inflation data due on Wednesday, any further developments in Syria could add another layer of complexity to the economic picture.

Consumer Price Index Inflation Data

This week, the main focus is on the consumer price index inflation data. According to Reuters estimates, the reading is expected to show a 2.7% year-on-year increase in the headline figure through November. Core CPI inflation is also anticipated to have remained sticky in November, which may give the Federal Reserve less incentive to cut interest rates aggressively.

The data will provide crucial insights into the state of the U.S. economy and help guide the Federal Reserve's monetary policy decisions. A higher-than-expected inflation reading could potentially lead to a more cautious approach from the central bank regarding rate cuts.

However, despite the expected increase in inflation, the labor market remains strong. Data on Friday showed stronger-than-expected growth in nonfarm payrolls, but the participation rate shrank, and growth in manufacturing payrolls was underwhelming. This suggests that while the economy is showing some signs of strength, there are also areas that require attention.

Impact on Wall Street

Wall Street indexes mostly shrugged off the strong payrolls data on Friday. Gains in technology stocks, driven by persistent optimism over artificial intelligence, offset declines in other economically sensitive sectors. The S&P 500 rose 0.3% to 6,090.27 points, while the NASDAQ Composite rose 0.8% to 19,859.77 points, both reaching new highs. However, the Dow Jones Industrial Average lagged, falling 0.3% to 44,642.52 points.

The performance of different sectors on Wall Street highlights the complexity of the current market environment. While technology stocks continue to drive the upward trend, other sectors are facing challenges and adjustments.

Markets are also eagerly awaiting more cues on what President-elect Donald Trump's policies will bring to the U.S. in the coming years. His policies could have a significant impact on various industries and markets, adding another layer of uncertainty to the already complex economic landscape.

U.S. stock futures showed minimal fluctuations on Sunday night. The S&P 500 and Nasdaq Composite had just completed their third consecutive winning week, with investors eagerly awaiting key inflation data to be released this week. This data is expected to provide crucial insights into the future direction of the market. Dow Jones Industrial Average futures rose by 11 points, equivalent to 0.02%, while S&P 500 futures gained 0.02% and the Nasdaq 100 futures remained flat. The previous Friday saw the S&P 500 and Nasdaq close at new records, with weekly increases of 0.96% and 3.34% respectively. However, the Dow was the only laggard, closing the week down 0.6%. These movements followed the November jobs report, which showed stronger-than-expected growth but not enough to dampen investor hopes of a Federal Reserve interest rate cut this month. The CME FedWatch Tool indicates that markets are pricing in an 85% chance of a quarter-point rate cut at the December 18 meeting.

Expert Insights on the Fed's Actions

Wharton School's finance professor Jeremy Siegel shared his views with CNBC's "Closing Bell" on Friday. He stated that "Everything else is working exactly the way the Fed wants. I think we're going to have one rate cut on that December 18 meeting, but truthfully, I think only two or three rate cuts next year. I think this strength could last." This provides valuable perspective on the potential future actions of the Federal Reserve and its impact on the stock market.

Inflation Data and Market Expectations

The November consumer price index, due out on Wednesday, is expected to show a slight uptick in pricing pressures. Economists polled by Dow Jones anticipate a 0.3% monthly increase and a 2.7% yearly increase. This would be an upward trend from the previous month's figures of 0.2% and 2.6% respectively. These expectations add to the market's anticipation and uncertainty surrounding inflation and its potential effects on stock prices.

Corporate Earnings and Market Activity

Corporate earnings continue to be a focus on Monday, with Oracle's results expected after the market close. This will provide further insights into the financial health of individual companies and their impact on the overall market. In addition, on Monday, investors will await October wholesale inventories data, which is due at 10 a.m. ET. This data will help in understanding the supply and demand dynamics in the economy and its implications for stock futures.