As the 2024 presidential campaign enters its final stages, the Republican Party seems to have an edge with voters who are pro-crypto. Former President Donald Trump has promoted a pro-Bitcoin (CRYPTO: BTC) agenda, even declaring his ambition for the United States to become the “crypto capital of the planet.”
In contrast, the Democratic Party seems less engaged with the cryptocurrency debate. The party’s 91-page platform lacks any mention of “crypto” or “digital assets.” The Biden-Harris administration has often been perceived as anti-crypto, and some of the individuals considered for economic advisor roles in a potential Harris-Walz administration are also viewed as skeptical of cryptocurrency. With these factors in mind, let’s explore how a Democratic victory might affect the cryptocurrency market.
Impact on Bitcoin
A Democratic victory could limit Bitcoin’s potential growth in the current market cycle. Currently, there’s consensus that Bitcoin might double in price, reaching anywhere from $100,000 to $150,000 by the end of 2025. This optimistic forecast partly hinges on the expectation that Trump will defeat Biden. However, with Kamala Harris leading the Democratic ticket, a Democratic win is becoming more likely, which could alter this outlook.
It’s not that the Harris administration is expected to crack down on crypto or implement anti-Bitcoin policies. Instead, the concern is that they may do nothing new. Unless something forces the administration’s hand, there may be no new comprehensive regulatory framework for crypto, no tax policies encouraging crypto investment, and no fiscal policies to boost Bitcoin mining.
This last point is particularly significant, as the Biden-Harris administration has generally viewed Bitcoin mining as energy-inefficient and detrimental to the national power grid. For instance, in September 2022, the White House released a report on digital assets, highlighting the environmental concerns associated with Bitcoin mining.
Impact on Altcoins
Altcoins, defined as any cryptocurrency other than Bitcoin, could also be affected. An uncertain regulatory environment tends to dampen investors’ risk appetite. Investors are less likely to put their money into speculative coins if there’s a risk that the government might classify those coins as securities.
Due to the absence of a comprehensive regulatory framework for crypto, the SEC has taken the lead in regulating the space, leading to some controversial decisions. This includes crackdowns on activities like crypto staking and mixed signals about which coins might be considered securities. At one point, the SEC even hinted that Ethereum (CRYPTO: ETH) might be classified as a security.
However, there is some positive news. The Democratic Party may be shifting its stance. Just days before the Democratic National Convention in Chicago, a group of influential crypto investors, calling themselves “Crypto4Harris,” hosted a virtual town hall. The event featured several prominent Washington lawmakers, including Senator Charles Schumer (D-NY).
A significant takeaway from the event was that the Financial Innovation and Technology for the 21st Century Act (FIT21) could soon pass. This legislation is pro-crypto and calls for digital assets to be regulated as commodities rather than securities. This would reduce the SEC’s role in crypto regulation, giving more authority to the Commodity Futures Trading Commission (CFTC).
Impact on Crypto Stocks
Finally, it’s crucial to consider how a Democratic victory might affect crypto stocks, particularly Bitcoin mining stocks. The outlook isn’t favorable for these companies. Marathon Digital Holdings (NASDAQ: MARA), for example, has indicated that it might move more of its mining operations overseas if the next presidential administration doesn’t adopt a more pro-Bitcoin stance.
Similarly, Coinbase Global (NASDAQ: COIN), the world’s second-largest cryptocurrency exchange, could be impacted. Any decline in market sentiment directly affects trading volumes and investor willingness to invest in risky assets. The SEC has repeatedly targeted Coinbase and popular coins traded on its platform, so a Democratic victory might lead to more of the same regulatory challenges.
Investment Strategy for 2025
If the Democrats win the 2024 election, what should you do? There’s no need to panic and sell your Bitcoin, but you should approach building a crypto portfolio with caution. For instance, consider investing in green Bitcoin mining stocks, such as CleanSpark (NASDAQ: CLSK), which uses clean energy sources for mining. This strategy might resonate more with an eco-conscious administration.
However, it’s essential to temper your expectations for crypto in 2025. Without a significant pro-crypto push from the new administration, it’s unlikely that Bitcoin or other cryptocurrencies will see a dramatic increase in value.
