The final struggle! The impact of the US election on the cryptocurrency market trends

Author: Biteye Core Contributor Viee

Today, November 5th, marks the "Election Night" of the U.S. elections, where the policy proposals of the two candidates are starkly different. This not only relates to the future of the U.S. economy but will also profoundly impact the direction of the cryptocurrency market.

If Trump is elected, will the crypto market be bullish?

If Harris is elected, will the crypto market be bearish?

Is it really so?

In this article, Biteye analyzes the impact of both candidates' policy proposals on the market to provide a reference for everyone.

0 1. Current Election Status and Key Timelines

The 2024 U.S. election is full of drama, with constant fluctuations. Looking back:

July 2024: Trump unexpectedly survives an assassination attempt, and his public support rating rises significantly, being regarded as the "chosen one." Biden announces his withdrawal from the race, and Vice President Harris takes over as a candidate.

August-September 2024: During the "honeymoon period" in August and September, Harris's support rating briefly surpasses Trump's.

October 2024: After the honeymoon period ends, Harris performs poorly in multiple media interviews and gradually falls behind Trump in policy promotion, leading to a decline in her poll support.

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

Below is the election timeline; the election results will be revealed tomorrow, November 6th, and we are about to glimpse the direction of the cryptocurrency market in the coming months.

Source: 270towin, Minsheng Securities Research Institute

0 2. Policy Differences Between Trump and Harris

According to analysis, the policy proposals of the two candidates have different impacts on the cryptocurrency sector.

First, let's discuss the conclusion that everyone is most concerned about: who is favorable for the crypto market?

Trump's election: Positive for the crypto market. Trump's policies tend to favor tax cuts, deregulation, and promoting capital inflow, which may boost activity in the crypto market, especially in terms of market sentiment and speculative trading.

Harris's election: Short-term potential negative for the crypto market, but long-term positive. Harris's policies lean towards increased regulation and higher taxes, which may create pressure in the short term. However, in the long run, Harris advocates for increased social welfare spending, and the overall stability and growth of the economy may provide indirect support for the crypto market.

Trump's favorable policies for crypto:

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

Finance: In terms of fiscal spending, he leans towards reducing government intervention and encouraging market freedom, which may drive more capital into the market.

Trade: Increasing tariffs may lead to rising inflation, causing investors to turn to cryptocurrencies as a hedge. However, it could also result in interest rate hikes due to anticipated inflation.

Cryptocurrency policy: Supports cryptocurrencies, viewing them as part of the future financial system, and is not in a hurry to impose strict regulations.

Harris's favorable policies for crypto:

Finance: Focuses more on social welfare spending, such as child subsidies and relief for low-income families, reflecting the Democratic preference for a larger government. This may stimulate consumption and demand in the U.S. economy, enhancing overall economic vitality. Although the crypto market may face stricter regulations, the stability and growth of the overall economy will also positively impact the crypto market.

Next, we will analyze from the perspective of taxation:

Trump: Supports tax cuts, such as reducing the corporate tax rate from 21% to 15%, and considering replacing income tax with tariffs, imposing a baseline tariff on U.S. imports, especially a 60% tariff on products from China. This aggressive tax reduction aims to stimulate investment and consumption, increase market liquidity, and boost demand for high-risk assets like cryptocurrencies.

Harris: Advocates for tax increases, particularly targeting large corporations and high-income earners, raising the corporate tax to 28% and increasing taxes on individuals earning over $400,000. This policy aims to increase government revenue for social welfare spending but may also weaken investor confidence and reduce capital inflow.

Comparison of impacts on the crypto market: Trump's tax cuts could attract more capital into the U.S., activate market sentiment, and indirectly promote growth in the crypto market. In contrast, Harris's tax increases may reduce market vitality, especially for investors in high-risk assets (like cryptocurrencies), making them less attractive.

0 3. Impact on BTC Prices and the Crypto Market

Impact on Bitcoin prices:

According to Bernstein and other analysts' predictions, if Trump is elected, Bitcoin prices could surge significantly, expected to reach $80,000 to $90,000 by the end of the year. The analysis team at Standard Chartered even provided a forecast of $125,000.

However, if Harris is elected, it could lead to Bitcoin prices dropping below $50,000, with some predictions suggesting it might fall to around $30,000.

Overall, the market's rising support for Trump is highly correlated with the upward trend in Bitcoin prices, while Harris's victory could 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 of the crypto market and its future development direction.

Short-term impact:

If Trump is elected: The volatility of the crypto market is expected to increase, especially with rising policy uncertainty, where speculative trading may dominate. Trump's tax cuts and deregulation will attract a large influx of capital, potentially leading to a short-term surge in the crypto market, benefiting BTC and altcoins like DOGE.

If Harris is elected: In the short term, the crypto market may face stricter regulatory measures, potentially suppressing market development. Investor sentiment may become more conservative, leading to a decline in liquidity and trading volume of crypto assets. However, there are differing opinions (e.g., @milesdeutscher) suggesting that concerns about Harris's potential "bottleneck" crackdown on practical tokens could trigger a massive Meme Season, as Memecoins are not practical tokens and thus not subject to SEC regulation.

Long-term impact:

If Trump is elected: In the long run, Trump's policies may promote the development of the crypto market, especially with increased support for Bitcoin and blockchain technology applications. Tax cuts, increased tariffs, and deregulation may encourage more funds to enter the crypto market, enhancing the status of cryptocurrencies as a safe-haven asset.

If Harris is elected: In the long run, as economic stability and regulatory frameworks improve, a more robust and regulated capital market can have a positive impact on the crypto industry.

0 4. Conclusion

Whether Trump or Harris is elected, it will profoundly affect the development landscape 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 burdens. Currently, attention should still be on the election results to adjust investment strategies according to policy directions.

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