What Happens to Crypto If Democrats Win? — Transcript

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1. 0:00When Trump won back in 2024, the entire
2. 0:03crypto world pretty much had the same
3. 0:05reaction. Finally, no more Gary Gensler,
4. 0:09no more boots on our necks, and after
5. 0:12years of fighting Washington, crypto was
6. 0:14finally going to enter its golden age.
7. 0:18But here we are almost two years later,
8. 0:20and that's not really how things played
9. 0:22out, right? You see, under Biden with
10. 0:25the most hostile SEC imaginable, Bitcoin
11. 0:29nearly tripled. But under Trump with the
12. 0:32friendliest administration ever, Bitcoin
13. 0:34has been stuck in a long and painful
14. 0:37bear market. And now with the midterms
15. 0:40just days away, it's looking like the
16. 0:43Dems could take back both chambers of
17. 0:45Congress. And everywhere I look on
18. 0:48Crypto X, people are bracing for the
19. 0:51worst, saying that the Dems are going to
20. 0:53wreck crypto, or that if we ever get a
21. 0:56President AOC, it's game over for
22. 0:59Bitcoin. But here's the thing. I think a
23. 1:02lot of people might be bracing for the
24. 1:04wrong thing. Because the more I look
25. 1:06into it, the more I think the Democrats
26. 1:09might not actually be that bad for
27. 1:11Bitcoin, and they could even end up
28. 1:13helping it by accident. Now, to be
29. 1:16clear, this is not a political video.
30. 1:19This is a what does this mean for our
31. 1:21portfolios video. So, let me walk you
32. 1:24through what the Dems could actually do,
33. 1:27what they can't, and why a Democratic
34. 1:30win might be good for some coins, but
35. 1:32not others. Okay, but before we get into
36. 1:35all that, I want to go back to that
37. 1:37weird stat from earlier, because I think
38. 1:39it tells us a lot about how much
39. 1:41influence Washington has on Bitcoin
40. 1:44anyways. Just think back to the Biden
41. 1:46years for a sec. Gary Gensler was
42. 1:48running the SEC, Coinbase and Binance
43. 1:50were getting sued, and banks were
44. 1:52quietly squeezing crypto companies left
45. 1:55and right. If you ask pretty much anyone
46. 1:57in crypto back then, they would have
47. 1:59told you that the Biden administration
48. 2:01wanted the entire industry gone. But
49. 2:04here's the thing, that same SEC approved
50. 2:06the spot Bitcoin ETFs, which was
51. 2:09arguably the biggest institutional win
52. 2:11crypto has ever had. And over Biden's
53. 2:14four years, Bitcoin went from roughly
54. 2:1635k to over 100k. Now, compare that to
55. 2:20these past two years. We got a strategic
56. 2:23Bitcoin reserve, a stablecoin law, and
57. 2:26most of the SEC lawsuits dropped, which
58. 2:29is pretty much everything on crypto's
59. 2:30wish list, right? And sure, Bitcoin hit
60. 2:33a new high of 126k last October, but
61. 2:36then it crashed below 60k this summer,
62. 2:39and now it's sitting around 80k. But the
63. 2:42part that really stuck out to me is what
64. 2:44happened just last month. The Clarity
65. 2:47Act, aka the big bill that would have
66. 2:50finally given crypto clear rules, failed
67. 2:53in the Senate. It was arguably crypto's
68. 2:55biggest legislative loss of the year.
69. 2:58And yet, Bitcoin went up that week. So,
70. 3:01point is, if you zoom out, the pattern
71. 3:04this cycle is quite clear. Political
72. 3:06wins and losses haven't really moved
73. 3:08Bitcoin's price that much. Under hostile
74. 3:11administration, Bitcoin nearly tripled,
75. 3:13and under a friendly one, it's been
76. 3:15struggling. Now, that doesn't mean that
77. 3:17Washington can't hurt crypto at all,
78. 3:20because some of what the Democrats could
79. 3:21do is very real. So, the question is,
80. 3:24what could the Democrats actually
81. 3:26change, and what can't they? Well, the
82. 3:29way I see it, there are two things that
83. 3:31are quite safe, and two that aren't. The
84. 3:34first safe one is the Stablecoin Genius
85. 3:37Act. That's already law, so undoing it
86. 3:39would take a brand new bill passed by
87. 3:41Congress and signed by the president.
88. 3:44And with Trump in office until 2029,
89. 3:46that's just not happening. But the
90. 3:47second safe one is the SEC and CFTC
91. 3:51rules. They've gotten a lot friendlier
92. 3:53to crypto lately, and if the Dems ever
93. 3:55control those agencies again, then sure,
94. 3:58they could reverse a lot of it. But
95. 4:00reversing rules isn't as simple as
96. 4:03flipping a switch. It takes new rule
97. 4:05making, comment periods, and if they
98. 4:07just go too crazy with it, they'll
99. 4:09likely face lawsuits. So, my take is
100. 4:13that we might see some tweaks here and
101. 4:15there, but I highly doubt that they just
102. 4:17reverse everything because that's just
103. 4:19not feasible. But, anyhow, in terms of
104. 4:22the two things that aren't safe, the
105. 4:24first one is the Clarity Act. That
106. 4:27failed with zero Democratic votes, so
107. 4:29with house, I honestly don't see it
108. 4:32passing anytime soon. And that's a real
109. 4:35blow to altcoins and DeFi since it was
110. 4:37supposed to finally give them clear
111. 4:39rules. But anyways, the one I'd actually
112. 4:42lose sleep over is the Strategic Bitcoin
113. 4:44Reserve. You see, it was created by
114. 4:46executive order, not by law, which means
115. 4:49a potential President AOC could hit that
116. 4:52sell button on day one. And since that
117. 4:55reserve is made up of Bitcoin the
118. 4:56government already holds, undoing it
119. 4:59could put all that Bitcoin up for sale.
120. 5:02Now, the good news is a Democratic
121. 5:04president couldn't happen until 2029 at
122. 5:07the earliest. So, that's not something
123. 5:09we need to worry about for now. And so,
124. 5:11if you add it all up, the realistic
125. 5:13damage here is stalled rules for
126. 5:15altcoins and a reserve that might get
127. 5:18sold down the road, neither of which is
128. 5:20an imminent danger for Bitcoin. But,
129. 5:23there is another side to all this that
130. 5:25almost nobody talks about, and it's the
131. 5:28reason I think the Democrats might
132. 5:30actually help Bitcoin by accident. It
133. 5:33comes down to something a lot of us
134. 5:34don't really want to admit, and that's
135. 5:37having a political champion has actually
136. 5:39cost crypto quite a bit. Just think
137. 5:42about the past 2 years. We got a
138. 5:44presidential meme coin launched the days
139. 5:47before the inauguration, family crypto
140. 5:49ventures, and a crypto super PAC
141. 5:51spending well over a hundred million
142. 5:53dollars on elections. For a lot of
143. 5:55people, that changed what crypto even
144. 5:57stood for. It stopped looking like a
145. 5:59neutral asset and started looking like a
146. 6:02political one. That's a big problem for
147. 6:04Bitcoin, especially, because its whole
148. 6:06pitch is that it's neutral money. It's
149. 6:09not supposed to be on anyone's side or
150. 6:11be any party's coin, right? And so,
151. 6:13here's the point. If the Democrats take
152. 6:15back power, crypto does lose its
153. 6:17political champion, but it might also
154. 6:19lose a lot of the baggage that came with
155. 6:22it. And if more scrutiny ends up
156. 6:24clearing out some of the bad actors in
157. 6:25the space, then what's left starts to
158. 6:28look a lot more credible to the general
159. 6:30public. And that can only be good for
160. 6:33Bitcoin. Now, to be fair, this is all
161. 6:35quite speculative. It's my personal
162. 6:37take, not some proven pattern. But I
163. 6:40don't think it's crazy, either. You see,
164. 6:41there's actually some history that backs
165. 6:43it up. Last time the Democrats ran
166. 6:46crypto policy, Gary Gensler kept putting
167. 6:48Bitcoin in its own box. He said over and
168. 6:52over that Bitcoin was a commodity, while
169. 6:54most other tokens were securities.
170. 6:56People even joked that he was a Bitcoin
171. 6:58maxi in disguise. Now, that is a bit of
172. 7:01a stretch, because plenty of Bitcoiners
173. 7:04felt his wrath, too. But the effect was
174. 7:06real, because his approach basically put
175. 7:09Bitcoin first. And that brings us to the
176. 7:12ultimate catch. Because a Bitcoin first
177. 7:14world is great if all you do is hold
178. 7:16Bitcoin. But for most of us, that's not
179. 7:19really the case, right? And the way I
180. 7:20see it, there are three places where a
181. 7:23Democratic win could actually hurt. The
182. 7:25first is altcoins and DeFi, because
183. 7:28without the Clarity Act, a lot of
184. 7:30projects remain stuck in a gray zone.
185. 7:32And if a future SEC chair decides to
186. 7:34take a hard line, then anything that
187. 7:37looks like a security could end up right
188. 7:39back in the crosshairs. Now, the bigger
189. 7:41coins like ETH are probably safe here,
190. 7:44since the SEC already dropped its
191. 7:46Ethereum investigation back in 2024. But
192. 7:49keep in mind, even SOL got called a
193. 7:52security in the SEC's lawsuits back in
194. 7:542023. So, the further you get from
195. 7:56Bitcoin, the more exposed you are.
196. 7:59Anyhow, the second weak point is all the
197. 8:01new stuff like perps, prediction
198. 8:03markets, and stock tokens. Those have
199. 8:06absolutely exploded in popularity
200. 8:08lately, but some of them have gotten
201. 8:10pushback from various groups. So, they
202. 8:13could all be potential targets under a
203. 8:15Democratic administration. But yeah, the
204. 8:18third weak point is the one that could
205. 8:20hit your wallet directly, and that's
206. 8:21taxes. You see, right now crypto has a
207. 8:24loophole that stocks don't. You can sell
208. 8:27a coin at a loss, buy it right back, and
209. 8:29still write off that loss on your taxes.
210. 8:31That's called the wash sale loophole,
211. 8:34and Democrats have already tried to
212. 8:36close it before. But there's an even
213. 8:37bigger one potentially, and that's
214. 8:39taxing unrealized gains, aka paying
215. 8:42taxes on coins you haven't even sold
216. 8:44yet. Parts of Europe are already heading
217. 8:47down that road, and while it'd take both
218. 8:49Congress and a president to pull that
219. 8:51off here, that fight could easily start
220. 8:54in a Democratic house. So, this is the
221. 8:57line I really want you to see. The
222. 8:59Democrats could be neutral or even good
223. 9:02for Bitcoin while still being quite bad
224. 9:04for a portfolio that's mostly altcoins.
225. 9:07But honestly, as much as we've been
226. 9:08analyzing the politics of all this, I
227. 9:11don't even think it's what matters for
228. 9:12where Bitcoin goes next. Because
229. 9:14remember, politics hasn't been what's
230. 9:17moving Bitcoin this cycle, right? We
231. 9:19already saw that earlier. I think there
232. 9:21are two things that matter a lot more
233. 9:24than who controls Congress or the
234. 9:26presidency. The first is history. If you
235. 9:28look at the year after each of the last
236. 9:30three midterms, Bitcoin went up every
237. 9:33single time by an average of about 54%.
238. 9:37And the explanation as to why is quite
239. 9:39simple. Before the midterms, there's a
240. 9:41lot of uncertainty, but afterwards,
241. 9:43investors finally know what to expect
242. 9:46and can plan around it. Now, three data
243. 9:48points is quite the small sample size,
244. 9:51so I wouldn't treat this like some law
245. 9:53of nature, but it does suggest that the
246. 9:55midterms have been more of a starting
247. 9:57gun for Bitcoin than anything else. But
248. 10:00anyhow, the second thing, which I think
249. 10:02matters even more, is money. I'm talking
250. 10:04interest rates, ETF flows, and how much
251. 10:08liquidity is sloshing around the system
252. 10:10because both parties run massive
253. 10:12deficits and historically more
254. 10:14government spending and more money
255. 10:16printing have been tailwinds for Bitcoin
256. 10:19no matter who's in charge. So if you're
257. 10:21trying to figure out where Bitcoin goes
258. 10:23from here, who controls Congress
259. 10:25probably matters a lot less than when
260. 10:28the money starts to flow again. So if
261. 10:30you ask me, I wouldn't sell my Bitcoin
262. 10:33over the midterm results. And honestly,
263. 10:35the more I think about this, the more
264. 10:37one thing keeps standing out to me. You
265. 10:39see, crypto spent the last two years
266. 10:41trying to cozy up to one party and yet
267. 10:45Bitcoin actually did better when
268. 10:47Washington was fighting it. So maybe the
269. 10:49best thing that could happen to Bitcoin
270. 10:51long-term isn't having a champion in the
271. 10:54White House, but rather not belonging to
272. 10:56anyone at all. Now the one thing that
273. 10:58would really change my mind is a
274. 11:00concrete plan to sell the Bitcoin
275. 11:02reserve and if that ever happens, trust
276. 11:04me, I'll be the first to tell you. But
277. 11:06anyways, I'm curious, what do you think
278. 11:08about all this? Let me know down in the
279. 11:10comments below.