Main Points :
- Bitcoin fell by over 2%, dropping to $56,500 following the U.S. presidential debate.
- Risk aversion in the markets led to the yen’s surge against the dollar, hitting 140.70 JPY/USD.
- Political-themed tokens were highly affected, with Trump-themed tokens seeing significant losses, while Harris-themed tokens rose.
- Broader stock indices and major cryptocurrencies like Ethereum and Solana remained relatively stable.
- Political betting markets on platforms like Polymarket reflected the debate’s influence, with traders favoring Harris over Trump.
Market Overview After the Debate
In the wake of the U.S. presidential debate between Kamala Harris and Donald Trump, financial markets displayed signs of distress. Bitcoin, the world’s largest cryptocurrency, dropped over 2%, reaching $56,500 as the debate triggered a wave of risk-averse sentiment among traders. This market reaction was fueled by the perception that Harris outperformed Trump, particularly in her stance on policies that indirectly impacted the financial markets.
Impact on the Cryptocurrency Market
While Bitcoin’s drop was notable, it wasn’t the only casualty. Dogecoin, one of the most well-known altcoins, led the market’s downturn with a 4% drop, making it the worst performer among major tokens. Meanwhile, tokens like XRP, Solana (SOL), Ethereum (ETH), and Binance Coin (BNB) showed little movement during the same period.
The CoinDesk20 Index, a broader market measure, also saw a decline, falling 2.5%, further indicating a market-wide reaction to the debate. This highlights how political events, particularly ones as high-profile as U.S. presidential debates, continue to significantly affect the cryptocurrency landscape.
Rise of the Yen Amid Market Turbulence
In traditional currency markets, the yen surged to its highest level since January, rising to 140.70 against the dollar. This climb was driven by traders moving toward safer assets, spurred by uncertainty and market disappointment following the debate. The yen’s rise also reversed the risk-taking behavior seen in the yen carry trade, where investors had borrowed in yen to invest in higher-yielding currencies and assets.
Political-Themed Tokens and Their Response
One of the most striking impacts was seen in political-themed tokens, particularly those associated with the debate participants. Tokens themed around Trump, such as PoliFi’s TRUMP, SOL-based TREMP, and MAGA, plummeted by 11.7%, 27%, and 23.5%, respectively. In contrast, KAMA, a token themed around Kamala Harris, rose 7.6%, showcasing a clear divergence in sentiment based on the debate’s outcome.
The PoliFi token ecosystem as a whole saw its market capitalization shrink by 8.8%, now standing at roughly $540 million. This indicates that traders are actively responding to political developments by rebalancing their portfolios in favor of tokens tied to perceived winners like Harris.
ETFs Show Signs of Recovery
In the aftermath of a prolonged losing streak, Bitcoin ETFs, particularly Fidelity’s FBTC, showed signs of recovery. The ETF saw inflows of $117 million over two consecutive days, signaling renewed investor interest despite the broader market’s uncertainty. This recovery reflects investor sentiment that, while short-term reactions may be negative, the long-term outlook for Bitcoin remains strong, particularly in the context of institutional investments like ETFs.
Broader Market Sentiments: Stocks and Bonds
Outside the cryptocurrency realm, broader financial markets were also impacted. U.S. stock futures tied to the S&P 500 fell 0.4%, as concerns about global trade tariffs, particularly Trump’s stance on Chinese trade, weighed heavily on sentiment. Chinese stocks dropped to seven-month lows as a result, further dampening global economic optimism.
The Role of Political Betting Markets
Betting platforms such as Polymarket provided an alternative lens through which to view the debate’s outcome. According to the platform, traders predicted a 56% likelihood of another debate taking place and a 27% chance that Trump would fire a campaign manager as a result of his performance. While political betting remains speculative, it offers valuable insight into the real-time reactions of market participants and their expectations for future political events.
Observers noted that Trump’s post-debate appearance on Sean Hannity’s FOX News show was a telling sign that his performance may not have been as strong as anticipated, leading to further speculation about the campaign’s direction in the coming weeks.
The U.S. presidential debate has once again demonstrated the intricate link between political events and financial markets, particularly in the volatile cryptocurrency space. While Bitcoin and other major tokens experienced a sharp drop, the broader sentiment is one of caution, with risk-averse behavior driving investors toward safer assets like the yen. Meanwhile, political-themed tokens provided a more direct reflection of the debate’s outcome, with Trump-related assets taking a hit and Harris-related assets gaining traction. The market’s focus will now shift to future debates and political developments, with traders closely monitoring any signs of further shifts in sentiment.
