Risk-Off Sentiment in Asia as U.S. Debate Influences Cryptocurrency Market

Risk-Off Sentiment in Asia Following U.S. Debate

Today marked a risk-off atmosphere across Asia, triggered by U.S. Vice President Kamala Harris allegedly outshining former President and cryptocurrency advocate Donald Trump during the second presidential debate. Bitcoin (BTC), the leading cryptocurrency by market capitalization, experienced a decline of over 2%, dropping to approximately $56,300. The broader CoinDesk 20 Index also followed suit, falling nearly 2.5%, as per CoinDesk data.

Among major cryptocurrencies, Dogecoin (DOGE) faced the steepest losses, sliding 4% in the past 24 hours, according to CoinGecko data. Meanwhile, other prominent tokens such as XRP, Solana’s SOL, Ethereum (ETH), and BNB Chain’s BNB showed little change in their values.

In a contrasting development, bitcoin exchange-traded funds (ETFs) saw a return to inflows, extending for a second consecutive day after a prolonged drought, amassing $117 million, primarily driven by Fidelity’s FBTC product. Earlier this year, Trump began appealing to the crypto community, often dubbed single-issue voters, positioning bitcoin and the broader cryptocurrency market as pivotal to his presidential ambitions. Consequently, traders have been keenly observing the odds of Trump and Harris on the betting platform Polymarket.

According to Polymarket traders, Harris emerged victorious in the first debate against Trump. Prior to this, Trump had engaged in a debate with Joe Biden, who subsequently withdrew from the race, passing the torch to Harris.

Market Reactions and Economic Indicators

In traditional financial markets, futures linked to the S&P 500 fell by 0.4%, while Chinese stocks plummeted to a seven-month low, as Trump defended his trade tariffs during the debate, asserting that they would not lead to increased prices for U.S. consumers. The Japanese yen, often viewed as a safe-haven asset, strengthened to 140.70 per U.S. dollar, marking its highest point since January and surpassing the early August level of 141.68. The yen saw a significant bid after the Bank of Japan hiked interest rates for the first time in decades, prompting a reversal of risk-on yen carry trades.

Impact on Political Finance Tokens

Trump-themed tokens are currently facing substantial declines. Despite Polymarket bettors indicating a tied election at 49-49, polls suggest that Kamala Harris triumphed in the debate. The MAGA (TRUMP) token has plummeted by 11.7%, the Doland Tremp (TREMP) token down by 27%, and the MAGA Hat (MAGA) token facing a drop of 23.5%. Conversely, the Harris-themed ‘Kamala Horris’ (KAMA) token has experienced a positive surge, gaining 7.6%. The overall market capitalization of the PoliFi category has decreased by 8.8%, now standing at just over $540 million.

On Polymarket, bettors are currently estimating a 56% likelihood of another debate taking place and a 27% chance that Trump will dismiss his campaign manager. Following the conclusion of the debate, Trump made an appearance on Sean Hannity’s Fox News show, a move that observers interpret as an indication that the campaign perceived the debate performance as lacking strength.