Bernstein analyst: Cryptocurrency could be a beneficiary of Trump's rally

Author: Benjamin Taubman, Bloomberg; Compiler: Baishui, Golden Finance

According to Bernstein's analysis, as the Republican Party's prospects improve and the party's standard-bearer increasingly embraces pro-cryptocurrency views, cryptocurrency may become a major "Trump rally" beneficiary in the current election cycle.

Gautam Chhugani and Mahika Sapra wrote in a report on Monday that Republicans see taking a favorable stance toward the cryptocurrency industry as a way to win voters and gain campaign funds from super PACs that support cryptocurrency politicians.

The original "Trump rally" was a simultaneous surge in U.S. stocks, Treasury yields and the dollar after Donald Trump won the 2016 presidential election. The report states that a Trump victory this time will lead to a cryptocurrency rally, which will be driven by institutional adoption and an improved regulatory environment. "The Republican side sees cryptocurrencies not only as a vote bank, but also as a meaningful source of funding," the analysts wrote. "If the electoral sentiment shifts in favor of the Republicans, cryptocurrencies will ultimately become a major 'Trump rally' beneficiary, and the hope of a favorable regulatory regime will change the 'use case' narrative around blockchain." Earlier this month, Trump met with the leaders of several Bitcoin mining companies at Mar-a-Lago and expressed his support for cryptocurrencies. He said that if he is elected president again, he will be an advocate for the cryptocurrency mining industry.

Trump later posted a message on his Truth Social account saying he wants all remaining Bitcoin to be “Made in the USA!!!”

According to a report from TD Cowen, despite Trump’s pro-crypto signals, he could still change his stance and revert to being a crypto skeptic if he’s elected.

The Cowen report noted that Trump’s comments on crypto during the first presidential debate of the 2024 election will serve as a bellwether for possible regulatory actions his administration may take.

“If (Trump) suggests anything other than full support, it could heighten anxiety that if he’s re-elected he’ll revert to the skepticism of his first term,” the report noted.

The report also noted that President Joe Biden could use Thursday’s debate to reposition himself on cryptocurrencies.

During the Biden administration, the SEC has earned scorn from cryptocurrency advocates for its crackdown on cryptocurrency trading platforms, which it accuses of trading unregistered securities. Still, many observers believe the SEC’s stance is softening since it approved bitcoin and ethereum exchange-traded funds earlier this year.

Bitcoin ETFs have spurred institutional adoption of the world’s largest cryptocurrency and helped push it up nearly 37% this year. Although an ETF for Ether has yet to officially launch, its price has risen nearly 40%.

“We urge caution with either candidate on the cryptocurrency front,” the Cowen report said. “Words may matter, but ultimately we believe it would be a mistake to assume either candidate will deliver on their promises.”