Trump vs. Harris: Who Will Lead Crypto's Future?

The US elections are almost here! Both the traditional and crypto markets are watching closely. Historically, US presidential elections have significantly influenced financial markets, and cryptocurrencies are increasingly sensitive to political events. 

Let’s look at the situation now.

By the time you read this newsletter, there is a chance that we will already know who is going to be the next “leader of the free world.” For crypto enthusiasts, the 2024 election holds especially intriguing implications for the market. Here’s what history shows us – and what might be next for digital assets.

A Look Back: How Past Elections Influenced Crypto Prices

Coincidentally, the US presidential election and Bitcoin halving occur in the same year. As such, it’s not a surprise that crypto has a history of surging post-election. For example, if you’d invested $1,000 in Bitcoin on Election Day in 2016, you’d have seen that investment rise to over $10,000 within a year. 

Similar trends were noted after the 2020 election, with both Bitcoin and Ethereum experiencing significant bull runs and reaching new all-time highs.

While the president doesn’t directly control crypto prices, their influence can be felt through appointments to key agencies like the SEC and CFTC, which handle much of the regulatory oversight. These regulatory stances can shape how accessible crypto assets become, making it easier or harder for individuals to invest in Bitcoin and other digital assets.

The Long View: Bitcoin’s Resilience Through Election Cycles

Bitcoin’s performance has improved steadily across election cycles, suggesting that while elections may create temporary volatility, the asset’s long-term trajectory remains upward. Analysts predict that Bitcoin may surpass $100,000 by the end of 2025 if historical patterns hold.

However, diminishing returns are becoming more evident, with each election cycle delivering smaller gains than the last. This trend implies a more moderated, but still optimistic, outlook for Bitcoin post-2024.

Trump vs. Harris: Contrasting Crypto Stances

Now let’s look at our two protagonists.

While Donald Trump has taken a pro-crypto turn with ambitious promises and ventures, Kamala Harris remains cautiously open, emphasizing regulatory stability and consumer protections. Here’s a closer look at each candidate’s approach to crypto and what it could mean for the industry’s future in the U.S.

Donald Trump

In 2019, it would’ve been hard to imagine Donald Trump embracing crypto. However, since 2021, his perspective has shifted dramatically. Trump’s interest was sparked unexpectedly by the world of NFTs. His first NFT collection, the “Trump Digital Trading Cards,” was a huge hit, selling out within a day and generating $4.5 million. The success of this collection, along with his involvement in other NFT launches, introduced Trump to the crypto world in a way he found surprisingly appealing.

Trump’s Crypto Promises and Platform

At the Bitcoin 2024 conference, Trump made several crypto-focused promises that resonated with the crowd:

• Firing SEC Chairman Gary Gensler: Trump vowed to replace Gensler, a key figure in the regulatory crackdown on crypto, which drew cheers from crypto enthusiasts.

• U.S. Bitcoin Stockpile: He proposed creating a national Bitcoin stockpile, where the government would retain all government-owned Bitcoin.

• Bitcoin > Gold: Trump boldly predicted that Bitcoin would surpass gold in value.

• Ross Ulbricht’s Sentence: He pledged to commute the sentence of Ross Ulbricht, a controversial figure in the crypto community.

• CBDC and Anti-Crypto Policies: Trump promised to prevent the implementation of a central bank digital currency (CBDC) and pledged to dismantle anti-crypto policies on his first day in office.

Trump has also leaned into crypto as part of his brand, recently launching “The DeFiant Ones” crypto platform. Marketed as a project to challenge big banks, it is backed by his sons and aims to offer decentralized financial services, including potential tokenized real estate investments, to broaden access to financial solutions.

This new stance has made Trump an unexpected crypto favorite, with the crypto community donating millions to his campaign.

Kamala Harris

On the Democratic side, Vice President Kamala Harris has been far less vocal about crypto. However, recent signals from her campaign suggest an openness to supportive policies for emerging technologies, with a focus on establishing stable regulations to support growth while ensuring consumer protections.

Harris’s Approach to Crypto Regulation

• Progressive Crypto Policies: While Harris has yet to reveal a detailed crypto policy, Brian Nelson, a senior advisor to her campaign, has indicated that she supports balanced regulations that foster innovation without compromising stability. This would involve setting up safeguards to protect consumers and reduce industry risks.

• Current Administration’s Stance: As part of the current administration, Harris has supported its cautious approach to crypto, which has involved greater scrutiny from agencies like the SEC, DOJ, and Treasury. This regulatory crackdown has been led by prominent figures such as Janet Yellen, Elizabeth Warren, and Gary Gensler.

Critics argue that this approach has stifled innovation in the U.S., leading to a “brain drain” as talent and investment move offshore. Proponents, however, emphasize that it’s necessary to combat fraud and regulatory non-compliance, pointing to scandals like FTX’s collapse as examples of the need for stricter oversight.

Harris’s Position: A Balancing Act?

With the Democratic Party emphasizing consumer protection, Harris’s position appears to be one of cautious support rather than full endorsement of crypto. While her campaign hasn’t released specifics, there’s hope in the industry that she may adopt a more balanced approach than the current administration, one that could prevent talent and innovation from leaving the U.S.

The Bottom Line

• Trump’s Vision leans heavily toward deregulation, seeing crypto as a tool for economic empowerment and independence from traditional financial institutions.

• Harris’s Vision emphasizes controlled innovation, balancing industry growth with necessary consumer protections and regulatory oversight.

Ultimately, the winner of this election could reshape the landscape of crypto regulation in the U.S., determining whether the country becomes a crypto-friendly environment or adopts a more regulated approach. As both sides weigh the benefits and risks of digital assets, the crypto community is keenly watching to see which path America will take.

Post-Election: What to Expect in the Crypto Market

The upcoming election is poised to be a key driver for Bitcoin’s short-term price action, with the potential to impact crypto sentiment based on regulatory stances and candidate outlooks. Analysts are closely monitoring the correlation between Bitcoin’s price movements and election odds, noting that Trump’s rising chances tend to buoy Bitcoin prices, likely due to his pro-crypto stance and endorsements from industry leaders like the Winklevoss twins and Marc Andreessen. 

Despite this volatility, Bernstein analysts remain bullish in the long term, maintaining a $200,000 price target for Bitcoin by 2025. They argue that the introduction of spot Bitcoin ETFs has significantly strengthened Bitcoin’s market position, making its growth trajectory "irreversible." This structural development, combined with Bitcoin’s resilient adoption, suggests that while the election may shape short-term sentiment, the broader market dynamics favor continued expansion of the crypto market, with ETFs and institutional participation forming a solid foundation for Bitcoin’s future.

Crypto investors should prepare for a potentially volatile market environment in the lead-up to and aftermath of the election. Polls, economic factors like inflation, and key debates could influence market sentiment and prices. For those planning to invest, focus on trustworthy guidance and being mindful of risks.

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