#10 Deep Dive - Crypto & US Elections
How does crypto evolve and why is it used as a tool in the US Election campaigns?
Welcome fellow investooors! It’s crypto time so let’s dive right in. To access more content find us here on Twitter. Enjoy!
In today's edition of our Deep Dive, I want to share some thoughts on the crypto situation in light of the upcoming US elections, the resurgence of past narratives, and an intriguing game on Base that fits into this unusual trend.
A Bit of Background
Financial markets are deeply intertwined with the phenomenon known as the "attention economy," where the primary currency is the attention of markets, investors, and the media. As the world becomes increasingly technological and interconnected, the role of attention grows, since the barriers to accessing assets and products have fallen with globalization. Despite the current downturn, globalization still offers incredible market and trade accessibility. Social media plays a huge role today, influencing voter opinions and shaping our perception of reality. Attention is everything, and where there is attention, there are emotions. And is there a place with more emotions and hype than the memecoin market?
The US elections, taking place this year, are among the most significant events worldwide. They will influence not only financial markets but also the direction the entire world will take. It's no coincidence that Xi Jinping met with Joe Biden a few weeks ago to ease tensions between the two countries at least until the elections.
The US elections are an event with the potential to attract massive attention, evoke strong emotions, and stir up dreams. This will likely be reflected not only on platforms like Polymarket, which operate as prediction markets where people bet on world events like in sports betting, but also, due to recent trends in the crypto world, in the memecoin market. The closer we get to the elections, the more intense the emotions will be. Let's go back to the beginning, to the time when the narrative of future elections started appearing on Crypto Twitter and was reflected in memes.
Beginnings of Solana’s Caricatures
When the memecoin season on Solana seemed to be winding down, another wave of memes suddenly appeared, trying to sustain the emotions and liquidity of Solana's chain. Once capital flees, it’s hard to convince it to return. That's why we saw new waves of memecoins on Solana, drastically different from each other, giving the impression that they were searching for that one narrative, that one trend that would capture the broader market's attention and heat up emotions as WIF did. One of these trends was caricatures of the most popular figures not only from the crypto world but also country leaders, historical figures, journalists, government-related individuals, etc. In other words, almost every attention-grabbing person had their caricature.
At the end of February 2024, memes like tremp, tooker kurlson, joe boden, ansum, hidler, and many other caricatures appeared on Solana. They behaved like standard new trend memecoins; they soared extremely high in the first hours only to take a steep drop and be forgotten. However, not all met the same fate as some survived and are doing quite well. Why? Because the people associated with these caricatures started attracting significant attention, and the whole rally began with Joe boden. This token found fertile ground, creating a caricature of the current president that, at first glance, didn’t have to be negatively perceived, especially if the price was rising.
Boden's rally quickly brought the tremp token into the trend, and we saw the first major rally of tokens fueled not by crypto events but by their politicization. The narrative lasted for just over a month, with both memecoins reaching their ATHs in early April and then starting a strong correction, falling by nearly 90%. Then an interesting twist occurred. In the following weeks, Trump began attracting more and more attention, gaining significant media coverage and taking the lead, as evidenced by the memecoin charts on Solana. Just as Trump's token started to rebound and gain attention and solid growth, Boden has been steadily declining.
https://dexscreener.com/solana/5o9kgvozarynwfbytzd1wdrkpkkdr6ldpqbuuqm57nfj
https://dexscreener.com/solana/6uybx1x8yucfj8ystpyizbyg7uqzaq2s46zwphumkjg5
Sidenote: I currently do not hold any political tokens. I played this trend in early March and sold both Boden and Tremp with multiple gains by the end of March.
However, there is one more token behind Trump, a much older one, almost from mid-2023. MAGA, the almost official Trump token, whose ticker stands for Make America Great Again. Can there be a more pro-Trump project?
Which token is more recognizable as a Trump token: MAGA or Tremp? I'd say MAGA, because it's not only on multiple chains like Ethereum, Solana, and Base, while Tremp is limited to Solana, but also its market capitalization is much larger compared to Tremp – currently $400 million compared to just under $60 million. With greater market capitalization comes greater volatility, as shown by Trump's recent speech at Mar-a-Lago, where the MAGA token gained +50% within a few hours, while Tremp rose by over 150%. However, remember that with volatility, we have not only aggressive rises but also bigger drops and overall risk of memecoin collapse.
We also have memes associated with people like Robert Kennedy Jr., but it seems he won't play a significant role in the elections as it appeared a few months ago. And if he won't play a significant role, can he attract attention like Trump? Will the RFK token become more popular than MAGA or Tremp? I don't think so. However, if someone wants to create a little diversification, I think it wouldn’t hurt to add the RFK memecoin as a small part of a political portfolio.
But there's one more thing to mention: Trump's recent meeting, changes in crypto, and something I wrote about in the Weekly a few months ago related to RFK.
Crypto as a Political Tool
When Robert Kennedy Jr. started his campaign targeting freedom-loving individuals, he used the argument of financial freedom, the oppression of the current system, and the freedom that Bitcoin offers. At first glance, it was an argument that passed without much echo, but I wrote then in the Weekly that we saw the first example of using Bitcoin in a campaign as a strong argument, and this is just the beginning. In the following weeks and months, it turned out that the Bitcoin proposals were positively received, so RFK began to play this card more strongly, announcing the integration of Bitcoin into the current financial system.
However, none of these appearances received as much attention as Trump's recent conference in Mar-a-Lago. Even Ryan Selkis, CEO of Messari, was invited to this conference, later taking the stage to speak a few words about the current state of cryptocurrencies in the US. So the thesis I put forward a few months ago seems not only true but will play a really big role in shaping the price of cryptocurrencies in the coming months.
Let's now move on to what happened in Mar-a-Lago and why it is so important.
https://twitter.com/twobitidiot/status/1788389754502856707
Donald Trump is great at rallying crowds and saying what people want to hear, so it's no surprise that most pro-crypto individuals are with him. Trump openly declares his support for blockchain technology and the cryptocurrency market. He also does not lack criticism of the current administration and contrasting statements that show pro-crypto individuals can count on him. How big of a topic has crypto become recently?
Research by Blockchain Association and Digital Currency Group shows that 1 in 5 voters in key states "consider cryptocurrencies an important topic in the 2024 elections." The vast majority of voters, both generally and pro-crypto, plan to vote in 2024 (over 90%) and are evenly divided between parties. Additionally, more and more people in the US own crypto and are frustrated by the inability to receive airdrops in the US and other obstacles.
The White House and the current administration are opposed to cryptocurrencies, and their stance does not seem to be changing, as shown by the recent SAB 121 vote. It was the first standalone cryptocurrency bill voted on in the House floor, showing how anti-crypto the current Democrats and SEC are. SAB 121 was rejected and is no longer in force, despite being introduced in March 2022. But what is this all about?
It's about the ability of banks to hold crypto assets, which SAB 121 did not allow. Rejection of this bill is therefore a huge step forward in the adoption of cryptocurrencies in the US and lays the foundation for Bitcoin to become one of the most popular assets of the 21st century.
https://twitter.com/SimplyBitcoinTV/status/1788331759429374072
Bonus: World PvP
A new on-chain game, World PvP, launched on the Base chain, is currently attracting significant market interest, fitting into the latest trend of combining politics with world events. This trend resulted in the creation of tokens named after countries on Solana, and someone on Base quickly picked up on this idea.
World PvP is a competitive online game where 211 countries, represented by ERC20 tokens, compete to achieve the highest market capitalization (Market Cap) within 30 days. After this period, the winner can take over part of the market capitalization of a chosen country. How does it work?
After 30 days, the country with the highest market capitalization gains the ability to drop a bomb on another country, taking over 50% of its liquidity, while the other 50% goes to another random country. Each country also has its president, who is the person with the most tokens of that country. The president of the winning country decides which other country will be attacked. Currently, the top countries are China, North Korea, and the USA, which is not surprising. For a country to enter Uniswap, its token must reach a market capitalization of $1 million, and then $333,000 in liquidity is added as a boost. Not every country will be able to receive a random 50% share after 30 days, which will make a few leaders stand out while other countries are quickly forgotten.
The game is still in its early stages, so much can change, and the project can fail. Nevertheless, it’s worth paying attention to due to the trends in the crypto world and the direction they are heading – in other words, it’s worth staying updated. An interesting fact is that the nickname of the current president of Nigeria is 'nigerianscammer,' and funnily enough, he is also the president of Brazil. Crypto can be surprising! :D
A Few Closing Words
It's amazing how quickly the crypto market changes. Suddenly, we find ourselves preferring to buy memecoins over altcoins, where instead of HODLing altcoins, we HODL memes, and just as we used to jump into memecoins for a moment, we now play altcoins only during few-day events.
The changes we currently see perfectly summarize the fact that the most important thing in life is quick adaptation to new conditions. Holding onto old rules will leave us far behind, and clinging to dead narratives is one of the quickest ways to zero out our portfolio.
While altcoins try to pretend they mean something, memecoins speak plainly: the only value in the crypto market is attention.
That’s all for today, thank you all for reading this week’s Deep Dive and see you in two weeks time! To access more content find us here on Twitter. See you there!
~ ModernEremite & Crypto o’Clock Team
This newsletter is provided for educational purposes only and does not constitute investment advice. It is not intended as a solicitation to buy or sell any assets, and readers are strongly advised to conduct their own research and seek independent financial advice before making any investment decisions. The authors and publishers disclaim any liability for any direct or consequential loss arising from any use of the information contained herein.