Bitcoin holds up at $73,000, poised for potential new all-time high just a week before the US election – an event that many traders believe will boost market optimism regardless of the outcome.
Eric Beiley, executive managing director of the Beiley Group at Steward Partners, told Quartz in a recent interview, Bitcoin’s rise suggests a potential election victory for Donald Trump, but time will reveal who the 47th President of the United States will be.
Many are already speculating about how Bitcoin might react to a potential Donald Trump or Kamala Harris victory. Debates are emerging over which outcome would be most favorable to cryptocurrency in the long term. Growing engagement from both ends of the political spectrum highlights how crypto has become a controversial and crucial issue in the 2024 elections. Here’s what you need to know.
What will happen to Bitcoin if Trump wins?
This election year, former President Donald Trump positioned himself as a “crypto candidate,” actively embracing digital assets as part of his campaign. He even began accepting campaign donations in various cryptocurrencies, including Bitcoin, Ether, Dogecoin and Solana, among others.
Of course, not all crypto enthusiasts are Trump supporters, but many welcome his recent pro-crypto stance. For example, At a Bitcoin conference, Trump promised to fire SEC Chairman Gary Gensler on his first day in office – a move that resonates strongly with crypto advocates, as Gensler’s policies have often been unpopular in the cryptosphere. Trump further promised to establish a national Bitcoin reservean ambitious goal that has captivated many in the crypto community. Although he did not specify the details or timeline of such a measure, the fact that he made Bitcoin a central talking point in his campaign generated considerable enthusiasm.
Considering these factors, it is clear that a Trump victory could lead to an immediate rise in the price of Bitcoin, which would boost the entire crypto market. Still, it’s unclear what the long-term trajectory of Bitcoin would be under a Trump presidency.
According to Chandra Duggiralaco-founder and CEO of the interoperability-focused crypto platform Portal to Bitcoina Trump victory could have varied impacts on Bitcoin in the long term. If Trump wins and the U.S. government begins actively holding Bitcoin, wealth managers could begin to view it as a credible asset, which could accelerate the adoption of Bitcoin in traditional wallets, he told Quartz in an email.
“This newfound confidence could lead to increased inflows into Bitcoin funds and associated investment products, thereby increasing demand and, potentially, its market price,” he added. “The ripple effect could create a rise in Bitcoin prices as global investors follow the United States’ lead in integrating Bitcoin into traditional financial portfolios.”
What will happen to Bitcoin if Harris wins?
On the other hand, Vice President Kamala Harris, who had Previously, I was careful before discussing cryptocurrencies, recently began to approach the subject more openly. She called for stronger regulatory oversight of the crypto market, emphasizing the need for clear rules to ensure consumer protection and financial stability.
Given Kamala Harris’ late and lukewarm response to Bitcoin, many expect an immediate drop in the price of the leading cryptocurrency if it winsfollowed by a possible rebound later.
Duggirala told Quartz that a Harris victory would likely signal a continuation of the current administration’s economic policies, which emphasize increased fiscal spending and progressive taxation. A Harris administration could also implement stricter regulatory oversight, particularly regarding private capital and crypto markets.
Duggirala noted that if high inflation persists alongside continued regulatory pressure, assets like Bitcoin and gold could benefit as investors look for ways to preserve their wealth despite these challenges.
“Bitcoin’s value, driven by scarcity, could make it a top choice for those looking to protect their wealth in a potentially inflationary landscape,” he said.
What will happen to Bitcoin in the event of a disputed election?
A lot polls indicate a tight race between Trump and Harriswhich could lead to an electoral outcome fraught with controversy and litigation. During periods of increased uncertainty, assets characterized by high volatility often experience increased trading volumes, which benefits derivatives traders. With its historic price swings, Bitcoin could become a favored asset for options traders looking to capitalize on potential price swings, Duggirala noted.
“During periods of market distress, Bitcoin has displayed a tendency for sharp price movements, both upwards and downwards,” he said. “In March 2020, at the height of the pandemic market crash, the price of Bitcoin fell nearly 50% in a matter of days, only to recover and reach new all-time highs in a matter of months.”
If the election results in prolonged uncertainty, Bitcoin options trading could prove exceptionally profitable. Historically, Bitcoin futures and options volumes increase during periods of increased market volatility, as evidenced by the bull run from late 2020 to early 2021, Duggirala told Quartz.
For seasoned traders, a contested election presents a great opportunity to take advantage of Bitcoin’s volatility, thereby drawing increased attention to Bitcoin markets globally, he added.
