Bitcoin: A Potential “Trump Trade”

According to analysts at Bernstein, Bitcoin is seen as a political trade linked to the outcome of the U.S. presidential election in November.

Impact of Election Outcomes

If Donald Trump, the Republican candidate, wins, Bitcoin is expected to soar to approximately $80,000 to $90,000 by the end of Q4. Conversely, if Vice President Kamala Harris wins, Bitcoin could drop below $50,000, potentially revisiting the $30,000 to $40,000 range where spot Bitcoin ETFs gained traction.

The analysts, including Gautam Chhugani, Mahika Sapra, and Sanskar Chindalia, noted that the crypto industry has received more favorable sentiments from Trump compared to the Harris campaign, despite efforts to reach out to both political sides. They anticipate a significant difference in policy outcomes based on who wins the election.

Current Regulatory Landscape

The analysts pointed out that the crypto market is navigating a difficult regulatory environment, particularly following actions against fraudulent entities like FTX and Luna, as well as major companies including Coinbase and Uniswap. This has intensified partisan debates within the industry.

Diverging Policy Views

Trump has made it clear in his campaign that he aims to position the U.S. as the “crypto capital of the world,” promoting ideas like becoming a Bitcoin mining powerhouse and appointing a crypto-friendly SEC chair. In contrast, Harris has largely ignored crypto in her public statements.

Market Resilience and Predictions

Despite challenges over the past three years, including high-interest rates and regulatory hurdles, Bitcoin remains resilient, with a 112% increase over the past year. Analysts believe a favorable regulatory environment could reduce risks for institutions considering digital assets, fostering competition with traditional assets.

Recent polling on the decentralized platform Polymarket shows Trump leading Harris by five percentage points, indicating a close race in critical swing states.

The analysts recommend that holding crypto positions could align strategically with a potential Trump victory, while Bernstein maintains long-term bullish price targets for Bitcoin, estimating $200,000 by the end of 2025, $500,000 by 2029, and $1 million by 2033. Gautam Chhugani holds long positions in various cryptocurrencies.