Bernstein analysts said that in the current election cycle, with the Republican Party's prospects improving and the party leader Trump's increasing support for cryptocurrencies, cryptocurrencies may become the new "Trump trade."
Republicans see a friendly stance toward the cryptocurrency industry as both a way to win over voters and to receive campaign funds from super PACs that support pro-crypto politicians, Gautam Chhugani and Mahika Sapra wrote in a report published Monday.
The original “Trump trade” concept was coined after Trump won the presidential election in 2016, which saw a simultaneous surge in U.S. stocks, Treasury yields, and the dollar. According to the report, a Trump win this time would lead to a rally in cryptocurrencies, helped by institutional adoption and an improved regulatory environment.
“Republicans view cryptocurrencies not only as a vote bank, but also as an important source of funding,” the analysts wrote. “If electoral sentiment tilts further toward the Republicans, cryptocurrencies will eventually become a major ‘Trump trade,’ and hopes for a favorable regulatory regime will change the narrative around blockchain ‘use cases.’”
Trump expressed his support for the cryptocurrency earlier this month when he met with leaders of several bitcoin miners at Mar-a-Lago, saying he would be an advocate for cryptocurrency mining if re-elected president.
Trump later posted on his Truth Social account that he hoped all remaining Bitcoin would be “Made in the USA!!!”
Despite his pro-crypto signals, a report from TD Cowen suggests Trump could still revert to being a crypto skeptic if elected.
Cowen's report noted that Trump's comments on cryptocurrencies in the first presidential debate in 2024 will serve as a bellwether for his potential government regulatory actions. "If he does not appear fully supportive, this could heighten anxiety that if he is re-elected, he will return to his skepticism about cryptocurrencies during his first term," the report said.
The U.S. Securities and Exchange Commission (SEC) has been criticized by cryptocurrency advocates for its heavy-handed crackdown on cryptocurrency trading platforms during the Biden administration. Even so, many observers believe the SEC’s stance is softening, as the SEC approved spot Bitcoin and Ethereum ETFs earlier this year.
Spot bitcoin ETFs have helped spur institutional adoption of the world’s largest cryptocurrency and helped push it up nearly 37 percent this year.
