Debate night on-chain

Blockchains show their feels like a sensitive teen at their first high school dance, and that was very much in evidence during Tuesday night's presidential debate.

Zoom in: The crypto world is praying it will get a break from Washington coming out of this year's national election.

• And most of it wants a win by former President Trump because he's made his support very clear.

Driving the news: One could see those hopes getting dashed in real time, however, almost as soon as the debate began, by looking at various on-chain assets.

• On Polygon, the prediction market Polymarket suddenly lost faith in crypto's champion, as Vice President Kamala Harris started confidently — and only became more so as she baited Trump into losing his cool.
• Bitcoin price started falling immediately, as well.

Meanwhile, it's been a blood bath in the many Trump meme coins out there. Newsletter notables like MAGA and TREMP plunged by double-digits, where they remain.

• Plus, not only did crypto advocates urge debate moderators to turn the conversation to cryptocurrency, bettors were putting money down on whether or not either candidate would speak of the topic.
• Those who bet they would are collectively out about $700,000.

The big picture: Anyone who doubts that this election is seen as crucial to the nascent cryptocurrency industry need only look at the $169 million its scions have posted to establish a foothold in Congress.

• And the price of bitcoin, in particular, has been seen as a proxy reading for how good traders feel about getting a positive outcome in November.
• "The industry anticipates more favorable treatment from one party," chief legal officer Jason Allegrante of the treasury management company Fireblocks, said in a statement. "It recognizes where the fault lines lie for the moment."

Between the lines: While much that was lost has been regained since the morning after the face-off, even some of those previously skeptical of the link between election odds and bitcoin price are changing their tune.

• One researcher, David Lawant at blockchain prime brokerage firm FalconX, had poured cold water last month on the idea that bitcoin's price is primarily a bet on the election.
• He had put the two metrics we've looked at here together (Polymarket bets and bitcoin price) to see if they moved as one through the end of July. They didn't.
• Bitcoin has a lot on its mind.

The latest: "It was probably too early in the election cycle" when he ran that analysis before, Lawant tells Axios in a post-debate follow-up call yesterday.

• He re-ran his analysis over recent days and it looks different. "We have this inkling that the market is starting to react to these things in a stronger and clearer way than it was before," he said.

The bottom line: "It's possible that the election will become a much stronger driver of prices."