With a gripping race developing between Donald Trump and Kamala Harris, the US Presidential elections are just around the corner. Investors are anxiously watching how the stock markets and crypto markets might turn out.
While the market sentiment largely leans on the assumption that a Trump win might turn all the stocks into green and the cryptocurrencies, which are already running bullish could shoot even higher, however, as the polls and betting platforms point towards a tighter race, this event is going to be a complete thrill for the investors as well as the one which will have larger implications as a whole to the country, its economy and to the stock markets, no doubt.
How Does Crypto Play a Key Role in the 2024 US Elections?
The 2024 US presidential election marks a historic moment for the global crypto and blockchain industries. For the first time, cryptocurrency is a prominent issue in a US election, and both candidates openly express their views on digital assets. This development underscores the growing importance of crypto in political discourse.
Notably, nearly half of the corporate contributions to the election have come from the crypto sector, which reflects the industry’s desire for regulatory clarity. As election day is nearing, the focus is now on how each candidate’s policies could reshape the digital asset landscape. While Donald Trump has positioned himself as a strong proponent of crypto, while Kamala Harris, although equally supportive of digital innovation, stresses consumer and investor protection.
The crypto sector has faced numerous SEC actions under Gensler, who mentions investor risks. While Trump plans to remove Gensler, Harris has not indicated a similar intention.
Impact Of The Recent Politics-
The upcoming 2024 US Presidential elections have driven the crypto markets volatile. While there have been other factors at play like the increasing institutional interest, coupled with Fed rate cuts and easing cycles, however, the elections are not behind in casting its impact on the currently bullish crypto scenario.
Standard Chartered predicts that Bitcoin will hit $73,000 by the election day, and could surge beyond $80,000 if Trump wins.
Experts believe that a Trump win in the November 2024 polls is likely to benefit Indian auto, energy, and metal sectors, and could be neutral for the pharmaceutical space. The Indian Information Technology (IT) sector, a major beneficiary of US demand, is expecting a Republican win, given former President Trump’s restrictive stance on the H-1B visa program, as per the report.
What Will Happen to Bitcoin if Trump Wins?
This election year, Trump has positioned himself as a “crypto candidate,” actively embracing digital assets as part of his campaign. Moreover, he even started accepting campaign donations in various cryptocurrencies, including Bitcoin, Ether, Dogecoin, and Solana, among others.
Trump has also promised to fire SEC Chair Gary Gensler on his first day in office, a move that resonates strongly with crypto advocates, as Gensler’s policies have often been unpopular in the crypto sphere. Trump further promised to establish a national Bitcoin reserve. The fact that he’s made Bitcoin a central talking point in his campaign has incited excitement.
Hence, it’s clear that a Trump victory could drive an immediate surge in Bitcoin’s price, which would lift up the whole crypto market.
Donald Trump’s Priorities If Elected
If Trump wins the elections, which the market currently perceives, then in terms of the overall domestic and foreign policy impact of Trump 2.0, the most positively impacted countries are believed to be Israel, Russia, Saudi Arabia, India, Australia, and Japan, while the most negatively impacted are China, Iran, Mexico, and Ukraine.
In his policies, Trump has promised to end inflation and make America affordable again. However, economists warn that his vow to impose higher tax on imports could push up prices.
He also proposes several tax cuts worth trillions, including an extension of his 2017 cuts which mostly benefited the wealthy.
He has vowed to seal the border by completing the construction of a wall and increasing enforcement. But he urged Republicans to ditch a hardline, cross-party immigration bill, backed by Harris. Which, she says that she would restore that deal if elected.
Notably, Trump has made tariffs a central pledge in this campaign. He has proposed new 10-20% tariffs on most foreign goods and much higher ones on those from China. He has also pledged to entice companies to stay in the US to manufacture goods, by giving them a lower rate of corporate tax.
How Would Bitcoin React to a Kamala Harris Win?
Harris has recently begun to address the topic more openly. She has called for stronger regulatory oversight of the crypto market, emphasizing the need for clear rules to ensure consumer protection and financial stability.
Many anticipate an immediate dip in leading cryptocurrency’s price if she wins, followed by a possible rebound later. A Harris administration might also implement more stringent regulatory scrutiny, especially concerning private capital and the crypto markets.
The analysis says that Harris’ win will come with a more accommodating stance by the U.S. Federal Reserve, and it will push the Reserve Bank of India (RBI) to ease rates domestically. This will benefit Indian non-banking financial companies (NBFCs), as falling interest rates could reduce funding costs and stimulate loan demand.
Harris’ policies, according to analysts at Rabobank International, would lead to a continued decline in inflation to the Fed’s 2 percent target and allow it to continue its cutting cycle in 2025.
Harris’ Priorities If elected-
Harris has stated that her day-one priority would be trying to reduce food and housing costs for working families. She has also emphasized her experience as a prosecutor in California taking on human traffickers. She has pledged, if elected, to ensure that it is the US and not China wins “the competition for the 21st Century”.
Harris has been a longtime advocate for a two-state solution between the Israelis and Palestinians and has called for an end to the war in Gaza. Harris has criticized Trump’s sweeping plan to impose tariffs on imports, calling it a national tax on working families which will cost each household $4,000 a year.
She is expected to have a more targeted approach to taxing imports, maintaining the tariffs the Biden-Harris administration introduced on some Chinese imports like electric vehicles.
Tax Rates-
Bank of America says his plan to cut the corporate tax rate to 15% from 21% will boost corporate earnings by 4%. How much it impacts each sector ultimately depends on sensitivity to changes in the tax rate.
On the other hand, Harris’ proposal to hike the corporate tax rate to 28% from 21% would have an inverse effect on sectors. But there are bright spots too. A Harris victory would likely benefit homebuilder stocks because of her proposal to build 3 million houses. Renewable energy stocks should also see gains due to the favorable view of wind and solar energy by Democrats.
Meanwhile, Bank of America expressed that as long as corporate profits continue to grow, the stock market will rise regardless of who wins the White House.
Bond Market-
The performance of the US bond market largely hinges on the direction of interest rates.
A Trump win would be seen ushering in higher interest rates, which would push bond prices lower. However, interest rates are expected to fall under a Harris win, which would be good news for bonds, as she wouldn’t pursue certain inflationary policies like tariffs or immigration deportations, which could fuel wage inflation.
Who Has Garnered More Support?
Notably, the US and Indian equities, have rallied during both Trump 1.0 and Joe Biden’s regimes. While the S&P 500 and the NASDAQ moved up 70.2 percent and 142.9 percent under Trump 1.0, both these indices gained 50.8 percent and 36.8 percent under the Biden administration, as per Bloomberg data.
Currently, the odds of Trump winning the elections on Polymarket stand at 59.5%, while Harris’s odds are at 40.5%. While Donald Trump has been associated with broad support from the crypto community, many people in crypto have endorsed Kamala Harris as well.
Trump has received endorsements from prominent crypto figures, including executives at major exchanges like Kraken and Gemini. Elon Musk has also endorsed Trump and recently appeared at several of the former president’s rallies.
Despite starting late, Harris has also received support from major figures in the crypto community, with Ripple co-founder Chris Larsen signing a letter to endorse Harris in early September.
Conclusion
Regardless of the election result, US crypto policy will have a global impact on the crypto market. Both Trump and Harris have indicated the importance of crypto, signifying that digital assets are turning into a bipartisan issue. So the real question now is not if there will be a crypto regulation in the US, but how it will do so to preserve its leadership in the digital economy.
Nevertheless, industry enthusiasts maintain that the industry’s growth is inevitable regardless of who wins the election. Coinbase CEO Brian Armstrong had argued, in August, that the incoming US administration will be “constructive” on crypto no matter which party wins.
No matter who wins the elections, investors should exercise caution before making any investment decisions to minimize their risks and observe the market without reacting suddenly to any news since volatility is building up.
