Author: Biteye core contributor Viee
Editor: Biteye core contributor Crush
Today, November 5, marks the 'Election Night' of the US elections, with the two candidates' policy proposals being completely different, which not only relates to the future of the US economy but will also profoundly affect the direction of the cryptocurrency market.
If Trump comes to power, will it be bullish for the cryptocurrency market?
If Harris comes to power, will it be bearish for the cryptocurrency market?
Is this really the case?
This article analyzes the impact of both candidates' policy proposals on the market to provide reference for everyone.
01 Current situation of the election and key timelines
The 2024 US elections are full of drama, with constant fluctuations in the process. Looking back:
July 2024: Trump unexpectedly survives an assassination attempt, leading to a significant increase in public support, being regarded as the 'chosen one.' Biden announces his withdrawal from the race, and Vice President Harris takes over as a candidate.
August-September 2024: During the 'honeymoon period' in August and September, Harris's support rate temporarily exceeds Trump's.
October 2024: After the honeymoon period ends, Harris performs poorly in multiple media interviews, and her policy promotions gradually lag behind Trump's, causing a decline in poll support.
Currently: According to the latest polls, Trump is leading in several key swing states, but the complexity of the Electoral College system means the final result is still unpredictable.
Below is the election timeline, with the election results to be revealed tomorrow, November 6, and we are about to glimpse the direction of the cryptocurrency market in the coming months.
Source: 270towin, Minsheng Securities Research Institute
02 Policy differences between Trump and Harris
According to analysis, the policy proposals of the two candidates have different impacts in the field of cryptocurrencies.
Let's first talk about the conclusion that everyone is most concerned about: who is beneficial for the cryptocurrency market?
Trump's rise to power: favorable for the cryptocurrency market. Trump's policies tend to favor tax cuts, relaxed regulations, and promote capital inflow, which may boost the activity of the cryptocurrency market, especially in market sentiment and speculative trading.
Harris's rise to power: potential short-term negative impact on the cryptocurrency market, but long-term benefits. Harris's policies tend to strengthen regulation and increase taxes, potentially bringing pressure in the short term due to increased regulation. However, in the long run, Harris's focus on social welfare spending and the overall stability and growth of the economy may provide indirect support for the cryptocurrency market.
Trump's favorable policies for cryptocurrency:
Taxation: Supports tax cuts that can stimulate investment and consumption, increase market liquidity, and boost demand for high-risk assets like cryptocurrencies.
Finance: In terms of fiscal spending, tends to reduce government intervention, encourages market freedom, which may promote more capital inflow into the market.
Trade: Raising tariffs may lead to rising inflation, causing investors to turn to cryptocurrencies as a hedge. However, it could also result in interest rate hikes due to expected inflation.
Cryptocurrency policy: Holds a supportive attitude towards cryptocurrencies, believing they are part of the future financial system, and is not in a hurry to implement strict regulations.
Harris's favorable policies for cryptocurrency:
Finance: More emphasis on social welfare spending, such as child subsidies and relief for low-income families, reflecting the Democratic Party's preference for a larger government. This may stimulate consumption and demand in the US economy, enhancing overall economic vitality. Although the cryptocurrency market may face stricter regulations, the overall stability and growth of the economy will also have a positive impact on the cryptocurrency market.
Next, we will select the tax perspective to develop our analysis:
Trump: Supports tax cuts, such as lowering corporate income tax from 21% to 15%, considering replacing income tax with tariffs, imposing baseline tariffs on US imports, especially a 60% tariff on products from China. This aggressive tax cut aims to stimulate investment and consumption, increase market liquidity, and boost demand for high-risk assets like cryptocurrencies.
Harris: Advocates for tax increases, particularly targeting large corporations and high-income earners, raising the corporate tax to 28% and increasing taxes on individuals earning over $400,000 annually. This policy aims to increase government revenue for social welfare spending but may also undermine investor confidence and reduce capital inflows.
Comparison of impacts on the cryptocurrency market: Trump's tax cut policy may attract more capital inflow into the US, invigorating market sentiment and indirectly promoting cryptocurrency market growth. In contrast, Harris's tax increase measures may reduce market vitality, especially for investors in high-risk assets (such as cryptocurrencies), diminishing their appeal.
03 Impact on BTC prices and the cryptocurrency market
Impact on Bitcoin prices:
According to predictions by Bernstein and other analysts, if Trump is elected, Bitcoin prices could rise sharply, expected to reach $80,000 to $90,000 by the end of the year. Standard Chartered's analysis team even gave a forecast of $125,000.
However, Harris's election may lead to Bitcoin prices dropping below $50,000, with some predictions suggesting it could fall to around $30,000.
Overall, the rise in market support for Trump is highly correlated with the upward trend in Bitcoin prices, while Harris's victory may trigger a price correction in the short term.
The reason lies in the fact that the policy differences between these two candidates will directly influence the psychological expectations of the cryptocurrency market and its future development direction.
Short-term impact:
Trump's election: It is expected that the volatility of the cryptocurrency market will increase, especially with increased policy uncertainty, where speculative trading may dominate. Trump's tax cuts and relaxed regulations will attract massive capital inflows, and the cryptocurrency market may welcome a wave of short-term capital, benefiting BTC and altcoins like DOGE.
Harris's election: In the short term, the cryptocurrency market may face stricter regulatory measures, potentially suppressing market development. Investor sentiment may become conservative, and the liquidity and trading volume of crypto assets may decline. However, there are differing opinions (e.g., @milesdeutscher) suggesting that concerns about Harris's 'bottleneck' crackdown on utility tokens may trigger a huge Meme Season. The reason being that Memecoins are not utility tokens and therefore not subject to SEC regulation.
Long-term impact:
Trump's election: In the long term, Trump's policies may promote the development of the cryptocurrency market, especially with more support for Bitcoin and blockchain technology applications. Tax cuts, increased tariffs, and relaxed regulations may encourage more capital to enter the cryptocurrency market, enhancing the status of cryptocurrencies as a safe-haven asset.
Harris's election: In the long term, with the stabilization of the economy and the improvement of the regulatory framework, a more robust and regulated capital market can have a positive impact on the cryptocurrency industry.
04 Summary
Whether Trump or Harris is elected, it will profoundly impact the development pattern of the cryptocurrency market. Trump's policies tend to promote market activity and capital flow, while Harris's policies focus on strengthening regulation and increasing tax burdens. For now, attention should be paid to the election results to adjust investment strategies according to policy directions.
In this political competition, the cryptocurrency market will undoubtedly become an important observation point.
