The 2024 elections in the United States were memorable in several aspects, not least being the appearance of PolitiFi. It’s a new form of meme coin cryptocurrency inspired by internet culture and humour that is explicitly affiliated with a political candidate. Among the biggest were MAGA, supporting the Donald Trump campaign, and BODEN, linked to the Joe Biden / Kamala Harris team.
In a paper published in the journal Finance Research Letters, three Concordia scholars explore the growth of the PolitiFi phenomenon and how it helped shape narratives, enhance visibility and, critically, boost political engagement among voters in the cryptosphere.
“These tokens initially were kind of a joke, but they were increasingly taken on as badges of honour to showcase political convictions,” says lead author Stéphane Sévigny, a PhD candidate studying digital assets at the John Molson School of Business.
“This really ended up exploding in market capitalization, especially at the beginning of 2024, when the election campaigns were starting to ramp up.”
As the race progressed and cryptocurrency became a campaign issue, the politically affiliated tokens gained an unusual amount of attention from traders. It soon became clear that they were eclipsing the usual meme coins in value, and in some cases using that value to assist their respective campaigns financially. At its peak, the MAGA coin had a market capitalization of around USD $750 million.
“They started taking on a life of their own,” he says.
Politics drives trading
The researchers conducted event studies around two critical moments in the campaign that affected MAGA and BODEN coins in very different way. Their findings suggested that political opinion may have been at least somewhat expressed through trading behaviour.
“When Trump was shot in July, we saw the support for Republican-allocated tokens went up significantly while those that were allocated Democratic went down,” says co-author Juliane Proelss, associate professor in the Department of Finance. “The opposite happened when Biden was replaced by Harris just over a week later.”
According to their analyses, Republican-affiliated coins rose 15 per cent after the assassination attempt while Democratic-affiliated ones dropped around nine per cent. When Biden left the race, Republican tokens dropped one per cent but Democratic ones dropped 45 per cent.
“This suggests that these PolitiFi coins were used to express traders’ opinions and support of their respective candidates,” she says.
Sévigny says the Trump camp was more adept at using PolitiFi to help him reach demographics he and other Republicans have often struggled to interact with. As a result, he outperformed traditional Republicans among young, university-educated males, including relatively high proportions of Black and Hispanic voters.
“Being a very opportunistic candidate, he was able to see this gap and started addressing the lack of regulation in the area. That may have helped shift the tide in the election,” he says.
Worthless now, valuable soon
While PolitiFi began in the United States, Sévigny thinks it is unlikely to play a major role in Canada’s upcoming elections. However, it may catch on in larger democracies with looser rules around campaign financing, such as some in South America.
Even though the tokens from the 2024 campaign have lost roughly 90 per cent of their value since the election, the researchers believe PolitiFi will remain a factor in upcoming contests, as either a financing vehicle or a voter engagement tool. It is possible that both major US political parties may issue their own official coins that can be cyclically employed every two to four years.
“It could be like buying a cap or a flag,” says Proelss, the Jacques-Ménard-BMO Professor in Capital Markets. “After the election is over, you can still have these coins somewhere in your digital cupboard and not do anything until the next election, when you pull them out again.”
