Why memecoins are changing US Election betting

Lea Hogg July 30, 2024

SiGMA news

Why memecoins are changing US Election betting

Memecoins are emerging as a new trend that is reshaping the intersection of finance and politics. As the 2024 US Presidential elections approach, political memecoins are gaining significant attention. These digital assets, inspired by high-profile politicians, have become a novel way for tech-savvy individuals to speculate on election outcomes.

On 13 July, when news broke of an assassination attempt on Donald Trump, a trading frenzy ensued. The price of TRUMP, a memecoin inspired by the former president, surged by more than a third within an hour. This event highlighted the potential of memecoins as bellwethers for political events.

Political memecoins, often represented by unflattering caricatures and deliberately misspelled names of politicians, have proliferated over the past year. Despite serving no purpose beyond financial speculation, their market performance has shown a correlation with the political fortunes of the individuals they represent.

For instance, the price of KAMA, a memecoin themed after Vice President Kamala Harris, tripled after Joe Biden announced his withdrawal from the race. This event paved the way for Harris to become the Democratic nominee, and the memecoin market reacted accordingly.

As election fever builds up, memecoins surge in popularity

In the US, it is illegal for residents to place bets on election results, and the Commodities and Futures Trading Commission (CFTC) has refused to allow gambling platforms to offer such bets. However, political memecoins have emerged as a loose proxy for election betting, offering both increased risk and potential reward due to the volatile nature of crypto markets.

***Source: SiGMA*** How memcoins differ from betting

An investment in a political memecoin is not an endorsement but a fun way to speculate on election outcomes. This sentiment reflects a shift in generational attitudes towards political speculation, with younger generations favouring memecoins over traditional betting.

The debate over the legalization of election betting in the US is ongoing, with companies like Kalshi, a New York-based event betting market, currently in legal proceedings with the CFTC. As this legal wrangling continues, political memecoins are filling the void, offering a new form of cultural expression tied to the pantomime that politics has become.

The rise of memecoins represents a passing of the baton from one political generation to the next. As the 2024 US Presidential elections approach, it will be interesting to see how this new form of political speculation evolves and impacts the world of finance and politics.