As the 2024 presidential campaign approaches, the Republican Party appears to have the upper hand among pro-crypto voters. Former President Donald Trump has outlined a pro-Bitcoin (CRYPTO: BTC) agenda, even going so far as to proclaim that he wants America to become the “crypto capital of the planet.”
On the other hand, Democrats don’t seem to have much to offer. In fact, there’s no mention of “crypto” or “digital assets” in the Democratic Party’s 91-page platform. The Biden-Harris administration has been widely viewed as anti-crypto, and some of the names being floated as potential economic advisors in the Harris-Walz administration are also considered skeptical of the cryptocurrency movement. With that in mind, here’s how a Democratic victory could impact the cryptocurrency market.
Bitcoin
A Democratic victory could cap Bitcoin’s upside during the current market cycle. Right now, the consensus is that Bitcoin has the potential to double in price to between $100,000 and $150,000 by the end of 2025. But that robust forecast, based in part on the assumption of a Trump victory over Biden, could change now that a Democratic victory seems much more likely with Kamala Harris as the party’s nominee.
It’s not so much that the Harris administration is going to crack down on cryptocurrencies or adopt anti-Bitcoin policies. It’s that it has no intention of doing anything new. Unless a new development forces the Harris administration’s hand, that means there will be no new comprehensive regulatory framework for cryptocurrencies, no new tax policies to encourage cryptocurrency investment, and no new tax policies to incentivize Bitcoin mining.
This 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 national power grid. In September 2022, for example, the White House released a comprehensive report on digital assets, finding that bitcoin mining was largely at odds with green economic policies.
Altcoins
Altcoins (generally defined as any cryptocurrency other than Bitcoin) could also suffer. This is due to the impact that an uncertain regulatory environment has on investors’ risk appetite. In other words, investors are much less likely to invest in speculative cryptocurrencies if there is a risk that the government could classify these cryptocurrencies as securities.
Given the lack of a comprehensive regulatory framework for cryptocurrencies, the SEC has largely taken the lead in regulating cryptocurrencies. And that has led to some confusing decisions, including a crackdown on activities like cryptocurrency staking, and a lot of mixed messaging about whether cryptocurrencies might actually be securities. At one point, the SEC even suggested that Ethereum (CRYPTO: ETH) could be a security!
The good news is that the Democratic Party may finally be here. Just days before the Democratic National Convention begins in Chicago, a group of influential cryptocurrency investors calling themselves “Crypto4Harris” held a virtual town hall meeting with several prominent Washington lawmakers, including Sen. Charles Schumer (D-NY).
One of the biggest takeaways from this event is that the Financial Innovation and Technology for the 21st Century Act (FIT21) could be passed very soon. This would be huge, as this pro-crypto legislation specifically requires digital assets to be regulated as commodities, not securities. This would mean that the SEC would have little to no role to play going forward, and the Commodity Futures Trading Commission (CFTC) would play a larger role.
Crypto stocks
Finally, it’s important to consider the potential impact of a Democratic victory on crypto stocks. This primarily concerns Bitcoin mining stocks. For now, things aren’t looking good for these companies. Marathon Digital Holdings (NASDAQ: MARA)for example, has even privately suggested that it would begin moving more of its mining operations overseas if the next presidential administration does not take a more pro-Bitcoin approach.
And don’t forget Coinbase Global (NASDAQ: COIN)the world’s second-largest cryptocurrency exchange. Any deterioration in sentiment in the cryptocurrency market 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 cryptocurrencies 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 Democrats win the November 2024 election. So what? You shouldn’t panic and dump your bitcoin, of course. But you need to be a lot smarter about how you build a cryptocurrency portfolio. For example, you might want to look for green bitcoin mining stocks like CleanSpark (NASDAQ: CLSK) that use clean energy sources to mine Bitcoin. This idea might 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 cryptos to skyrocket in value.
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Dominic Basulto has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Bitcoin, Coinbase Global, and Ethereum. The Motley Fool has a disclosure policy.
Here’s How a Democratic Victory Could Affect the Cryptocurrency Market was originally published by The Motley Fool
