If Harris wins, it may be time to rethink future price predictions for Bitcoin and crypto stocks.
Heading into the final stretch of the 2024 presidential campaign, the Republican Party appears to have the upper hand with pro-crypto voters. Former President Donald Trump outlined pro-Bitcoin (BTC 0.01%) agenda, even going so far as to announce that he wants America to become the “crypto capital of the planet.”
In contrast, the Democrats don’t seem to be offering anything special. In fact, nowhere in the Democratic Party’s 91-page platform does it mention “crypto” or “digital assets.” The Biden-Harris administration is largely seen as anti-cryptocurrency, and some of the names being floated as potential economic advisers in the Harris-Waltz administration are also seen as skeptical of the cryptocurrency movement. With that in mind, here’s how a Democratic victory could affect the cryptocurrency market.
Bitcoin
A Democratic victory could put a cap on how much higher Bitcoin can go during the current market cycle. Right now, the current consensus is that Bitcoin has the potential to double in price to anywhere from $100,000 to $150,000 by the end of 2025. But that bullish prediction, based in part on the assumption that Trump will beat Biden, could change now, when the Democrat victory looks much more likely with Kamala Harris as the party’s nominee.
It’s not so much that the Harris administration will crack down on crypto or adopt anti-Bitcoin policies. It’s that they don’t plan to do anything new. Unless some new development forces the hand of the Harris administration, this means no new comprehensive regulatory framework for crypto, no new tax policies to encourage crypto investing, and no new fiscal policies to incentivize bitcoin mining.
That last point deserves special attention given that the Biden-Harris administration has generally tended to view Bitcoin mining as energy inefficient and a drag on the nation’s power grid. In September 2022, for example, the White House released a comprehensive report on digital assets that found bitcoin mining to be largely at odds with green economic policies.
Altcoins
Altcoins (generally defined as any cryptocurrency that isn’t Bitcoin) can also suffer. This is due to the impact that an uncertain regulatory environment has on investors’ risk appetite. Put another way, investors are much less willing to invest in speculative coins if there is a risk that the government will classify those coins as securities.
Given the lack of a comprehensive regulatory framework for crypto, the SEC has largely taken the lead in regulating crypto. And this has led to some head-scratching decisions, including a crackdown on activities like crypto staking, and very mixed messages about which coins can actually be securities. At one point the SEC even suggested this Ethereum (ETH -0.93%) it could be security!
Image source: Getty Images.
The good news here is that the Democratic Party may finally be seeing the light. Just days before the Democratic National Convention kicked off in Chicago, a group of influential crypto investors calling themselves “Crypto4Harris” organized a virtual town hall featuring several top Washington lawmakers, including Sen. Charles Schumer (D-NY).
One big takeaway from the event was that the Financial Innovation and Technology for the 21st Century (FIT21) Act could be passed very soon. That would be huge because this pro-crypto legislation specifically calls for digital assets to be regulated as commodities, not securities. This would mean little or no role for the SEC in the future and a greater role for the Commodity Futures Trading Commission (CFTC).
Crypto stocks
Finally, it’s important to consider the potential impact of a Democratic victory on crypto stocks. First of all, this includes Bitcoin mining stocks. It’s not looking good for these companies so far. Marathon Digital Holdings (MARA 10.85%)for example, it even privately suggested that it would start moving more of its mining operations overseas if the next presidential administration didn’t take a more pro-Bitcoin approach.
And don’t forget about Coinbase Global (COIN 6.54%)the second largest cryptocurrency exchange in the world. Any deterioration in crypto market sentiment has a direct impact on trading volume and investors’ willingness to put their money into risky assets. The SEC has repeatedly taken action against Coinbase and the popular coins traded on its platform, so a Democratic victory could be a green light for more of the same troubling activity.
How to Invest in Crypto in 2025
Let’s say the Democrats do win the election in November 2024. Then what? Of course, you shouldn’t panic and dump your bitcoins. But you need to be much smarter about how to build a crypto portfolio. For example, you may want to look for greenback bitcoin mining stocks such as CleanSpark (CLSK 6.23%) which use clean energy sources to mine bitcoins. This idea may be more attractive under an environmentally conscious administration.
That being said, you should definitely keep your expectations in check when it comes to crypto in 2025. Without a big pro-crypto push from the new presidential administration, I wouldn’t hold my breath waiting for Bitcoin or other cryptocurrencies to skyrocket in value.