What will happen to Bitcoin if Donald Trump or Kamala Harris win the election? Here’s what you need to know

Bitcoin is holding at $73,000, poised for a potential new all-time high just a week before the US election – an event that many traders expect will boost market optimism regardless of the outcome.

Eric Bailey, executive managing director of The Beiley Group at Steward Partners, told Quartz in a recent interview that Bitcoin’s rise suggests a potential election victory for Donald Trump, but time will tell who will be the 47th president of the United States.

Many are already speculating about how Bitcoin might react to a potential victory by Donald Trump or Kamala Harris. There is debate about which outcome will be more favorable for the cryptocurrency in the long term. Growing participation from both ends of the political spectrum underscores how cryptocurrency has become a contentious and key 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,” heavily using digital assets as part of his campaign. He even began accepting donations for the campaign in a variety of cryptocurrencies, including Bitcoin, Ether, Dogecoin and Solana, among others.

Of course, not all crypto enthusiasts support Trump, but many welcome his recent stance in support of cryptocurrencies. For example, at the Bitcoin conference, Trump promised to fire SEC Chairman Gary Gensler on his first day in office – a move that resonates strongly with cryptocurrency advocates, as Gensler’s policies have often been unpopular in the crypto space. Trump also promised to create a national bitcoin reserve, an ambitious goal that has captivated many in the crypto community. While he did not specify the details or timing of such a move, the fact that he has made Bitcoin a central talking point in his campaign has caused significant excitement.

Considering these factors, it is clear that a Trump victory could lead to an immediate rise in Bitcoin prices, which will lift the entire crypto market. However, it is difficult to predict what Bitcoin’s long-term trajectory will be under a Trump presidency.

According to Chandra Duggirala, co-founder and CEO of interoperability-focused cryptocurrency platform Portal To Bitcoin, a Trump victory could have various implications for Bitcoin in the long term. If Trump wins and the U.S. government begins to actively hold Bitcoin, asset managers may begin to view it as a safe haven asset, which could accelerate Bitcoin’s adoption into traditional portfolios, he told Quartz in an email.

“This newfound confidence could lead to increased inflows into Bitcoin funds and related investment products, leading to increased demand and potentially their market price,” he added. “The ripple effect could lead to higher Bitcoin prices as global investors follow the US lead in integrating Bitcoin into mainstream financial portfolios.”

What will happen to Bitcoin if Harris wins?

On the other hand, Vice President Kamala Harris, who has previously been cautious about discussing cryptocurrencies, has recently become more open about the topic. She called for stronger regulatory oversight of the cryptocurrency market, emphasizing the need for clear rules to ensure consumer protection and financial stability.

Given Kamala Harris’ late and lukewarm reaction to Bitcoin, many are expecting an immediate price drop for the leading cryptocurrency if it wins, followed by a possible recovery.

Duggirala explained to Quartz that a Harris victory would likely mean a continuation of the current administration’s economic policies, which emphasize increased spending and progressive taxation. A Harris administration could also introduce stricter regulatory oversight, especially around private equity and cryptocurrency markets.

Duggirala noted that if high inflation persists along with continued regulatory pressure, assets like Bitcoin and gold could benefit as investors look for ways to preserve their wealth amid these challenges.

“Bitcoin’s scarcity value could make it a better choice for those looking to protect their wealth in the face of potential inflation,” he said.

What will happen to Bitcoin if there is a contested election?

Many polls point to a tight race between Trump and Harris that could leave the election fraught with controversy and litigation. During periods of heightened uncertainty, assets characterized by high volatility often increase trading volumes, benefiting derivatives traders. Given historical price movements, Bitcoin could become the asset of choice for options traders looking to benefit from potential price movements, Duggirala noted.

“During periods of market turmoil, Bitcoin has shown a tendency to experience sharp price movements, both up and down,” 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, but recovered within months and soared to new all-time highs.”

If the election leads to prolonged uncertainty, Bitcoin options trading could prove extremely profitable. Historically, Bitcoin futures and options volumes rise during periods of increased market volatility, as evidenced by the bull run from late 2020 to early 2021, Duggirala told Quartz.

For savvy traders, the contested election represents a golden opportunity to take advantage of Bitcoin’s volatility, drawing increased attention to Bitcoin markets around the world, he added.

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