According to analyst Bernstein, as the prospects of the Republican Party are improving and more of their leaders are accepting the view of supporting cryptos, cryptos may become the main "Trump trade" in the current election cycle.
In a Monday report, Gautam Chhugani and Mahika Sapra wrote that Republicans view taking a favorable stance towards the crypto industry as a way to win voters and also as a way to receive campaign funds from Super PACs supporting crypto-friendly politicians.
The original 'Trump trade' was created during the period when the US stock market, US Treasury yields, and the US dollar all rose in the wake of Trump's victory in the 2016 presidential election. The report found that Trump's victory this time around is expected to lead to a rebound in crypto, thanks to institutional adoption and an improvement in the regulatory environment.
"The Republican side not only sees cryptocurrencies as a reservoir of votes, but also as a meaningful source of funding. If the election sentiment leans more towards the Republicans, crypto will ultimately become the main 'Trump trade', and the narrative around blockchain use cases will change for the better with favorable regulatory systems."
Earlier this month, Trump met with leaders of several Bitcoin mining companies and expressed his support for cryptocurrency. He said that if he were to become president again, he would be an advocate for the crypto mining industry.
Trump later posted on his Truth Social account that he hoped that all remaining Bitcoin would be 'Made in the USA.'
However, according to a report by TD Cowen, despite sending signals in support of cryptocurrencies, Trump may still backtrack and become a crypto skeptic if he is elected again.
Cowen's report notes that Trump's comments on cryptocurrencies in the first presidential debate of the 2024 election will be a barometer of potential regulatory action by his administration.
The report states, "If he (Trump) offers anything other than full-throated support, it could cause anxiety that, if re-elected, he would revert back to the skepticism of his first term."
The report also notes that Biden may use Thursday's debate to reposition himself on his stance towards cryptocurrency.
During the Biden administration, the US Securities and Exchange Commission (SEC) has actively cracked down on crypto exchanges, accusing them of trading unregistered securities and earning the contempt of crypto advocates. Nonetheless, many observers believe that the SEC's position is softening since it approved Bitcoin and Ethereum ETFs earlier this year.
The Bitcoin ETF has spurred institutional adoption of the world's largest crypto, driving it up nearly 37% this year. Ethereum has increased by nearly 40%, though an ETF for this crypto has yet to officially launch.
"We urge caution when reacting to any candidate's stance on cryptocurrency. Words may matter, but ultimately we believe it's wrong to assume that any one candidate will follow through on promises," Cowen's report stated.
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