The last hurrah! The impact of the US election on the crypto market

If Trump takes office, will the crypto circle be bullish?

If Harris takes office, will the crypto circle be bearish?

Is it really so?

This article by Biteye analyzes the impact of their policy proposals on the market to provide a reference for everyone.

The 2024 US presidential election is full of drama, with constant fluctuations in the process. Looking back:

July 2024: Trump unexpectedly survived an assassination attempt, with his approval rating surging, and he was seen as the "chosen one". Biden announced his withdrawal from the race, and Vice President Harris took over the candidacy.

August-September 2024: During the "rookie protection period" in August and September, Harris' approval rating temporarily exceeded Trump's.

October 2024: After the rookie protection period ended, Harris performed poorly in media interviews and her policy promotion gradually lagged behind Trump, causing her poll numbers to decline.

Currently: According to the latest polls, Trump has taken the lead in several key swing states, but the complexity of the Electoral College system means the final result is still unpredictable.

The timeline of the election is as follows, and the election results will be revealed tomorrow, November 6th. We are about to glimpse the direction of the crypto market in the coming months.

Source: 270towin, Minsheng Securities Research Institute

According to the analysis, the policy proposals of the two candidates have different impacts on the crypto currency field.

Trump in office: Bullish for the crypto market. Trump's policies tend to favor tax cuts, relaxed regulation, and promote capital inflows, which could stimulate the activity of the crypto market, especially in terms of market sentiment and speculative trading.

Harris in office: Potentially bearish for the crypto market in the short term, but bullish in the long term. Harris' policies tend to strengthen regulation and increase taxes. In the short term, tighter regulation may put pressure on the market. However, in the long run, Harris' emphasis on social welfare spending and the overall stability and growth of the economy may indirectly support the crypto market.

Taxation: Supports tax cuts, which can stimulate investment and consumption, increase market liquidity, and stimulate demand for high-risk assets like cryptocurrencies.

Fiscal: In terms of fiscal spending, he tends to reduce government intervention and encourage market freedom, which may drive more capital into the market.

Trade: Raising tariffs may lead to rising inflation, causing investors to turn to cryptocurrencies as a hedge. But it may also lead to interest rate hikes due to expected inflation.

Cryptocurrency policy: Holds a supportive attitude towards cryptocurrencies, believing that they are part of the future financial system, and is not in a hurry to implement strict regulation.

Fiscal: More focused 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 crypto market may face stricter regulation, the overall stability and growth of the economy will also have a positive impact on the crypto market.

Trump: Supports tax cuts, such as reducing the corporate income tax from 21% to 15%, and considering using tariffs to replace income tax, imposing a benchmark tariff of 60% on imported products, especially from China. These radical tax cut measures are aimed at stimulating investment and consumption, increasing market liquidity, and stimulating demand for high-risk assets like cryptocurrencies.

Harris: Proposes to raise taxes, especially on large corporations and high-income earners, increasing the corporate tax rate to 28% and raising taxes on those with annual incomes over $400,000. This policy is aimed at increasing government revenue for social welfare spending. But it may also undermine investor confidence and reduce capital inflows.

Comparison of impact on the crypto market: Trump's tax cut policy may attract more capital to the US, activating market sentiment and indirectly promoting the growth of the crypto market. Harris' tax increase measures may reduce market vitality, especially for high-risk asset investors like cryptocurrencies, making them less attractive.

According to forecasts by Bernstein and other analysts, if Trump is elected, the price of Bitcoin could surge significantly, potentially reaching $80,000 to $90,000 by the end of the year. The analysis team at Standard Chartered Bank even gave a forecast of $125,000.

However, if Harris is elected, Bitcoin's price could fall below $50,000, and some forecasts even suggest it could drop to around $30,000.

Overall, the market's rising support for Trump is highly correlated with the upward trend in Bitcoin's price, while Harris' victory may trigger a short-term price correction.

The reason lies in the fact that the policy differences between these two candidates will directly affect the psychological expectations and future development direction of the crypto market.

Trump in office: The volatility of the crypto market is expected to increase, especially in the face of policy uncertainty, and speculative trading may become the dominant force. Trump's tax cuts and relaxed regulation will attract a large amount of capital inflows, which may bring a short-term capital influx to the crypto market, benefiting BTC and Altcoins like Doge.

Harris in office: In the short term, the crypto market may face stricter regulatory measures, and market development may be suppressed. Investor sentiment may become more conservative, and the liquidity and trading volume of crypto assets may decline. However, there are also different voices (@milesdeutscher) who believe that the market's concern about Harris' "bottleneck-style" crackdown on utility tokens may trigger a huge Meme Season. The reason is that Memecoins are not utility tokens, so they are not subject to SEC regulation.

Long-term impact:

Trump in office: In the long run, Trump's policies may promote the development of the crypto market, especially the application of Bitcoin and blockchain technology, which will receive more support. Tax cuts, increased tariffs, and relaxed regulation may lead to more capital flowing into the crypto market, enhancing the status of cryptocurrencies as a hedge asset.

Harris in office: Although the crypto market may face stricter regulation in the short term, the overall stability and growth of the economy under Harris' policies may indirectly support the crypto market in the long run. Increased social welfare spending may stimulate consumption and demand, which could benefit the crypto market.

Harris elected: In the long run, as the economic stability and regulatory framework are improved, a more stable and standardized capital market can have a positive impact on the crypto industry.

Whether Trump or Harris is elected, it will have a profound impact on the development pattern of the crypto market. Trump's policies tend to promote market activity and capital flow, while Harris's policies focus on strengthening regulation and increasing tax burden. For now, we should still pay attention to the election results in order to adjust the investment strategy according to the policy direction.

In this political contest, the crypto market will undoubtedly become an important observation point.