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 has outlined a pro-Bitcoin (BTC +1.43%) agenda, even going so far as to proclaim that he wants America to become the "crypto capital of the planet."
In contrast, the Democrats don't appear to be offering much of anything. In fact, there's no mention of "crypto" or "digital assets" anywhere in the 91-page Democratic party platform. The Biden-Harris administration has largely been viewed as anti-crypto, and some of the names that are being floated as potential economic advisors in the Harris-Walz administration are also viewed as 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 put a cap on just how much higher Bitcoin might 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 robust forecast, based in part on the assumption of Trump defeating Biden, could change now that a Democratic victory is looking much more likely with Kamala Harris as the party's candidate.
CRYPTO: BTC
Key Data Points
It's not so much that the Harris administration is going to crack down on crypto, or that they are going to adopt anti-Bitcoin policies. It's that they are not planning to do anything new. Unless some new development forces the Harris administration's hand, that means no new comprehensive regulatory framework for crypto, no new tax policies to encourage crypto investing, and no new fiscal policies to stimulate Bitcoin mining.
This last point is worth particular 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, finding that Bitcoin mining was largely at loggerheads with green economic policies.
Altcoins
Altcoins (typically defined as any cryptocurrency that's not Bitcoin) could also suffer. This is due to the impact that an uncertain regulatory environment has on the risk appetite of investors. Put another way, investors are much less likely to invest in speculative coins if there's the risk that the government could classify those coins as securities.
Given the lack of a comprehensive regulatory framework for crypto, the SEC has largely taken the lead on the regulation of crypto. And that has led to some head-scratching decisions, including a crackdown on activities such as crypto staking, and plenty of mixed messages about which coins might actually be securities. At one point, the SEC even suggested that Ethereum (ETH +2.87%) might be a 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" hosted a virtual town hall featuring several top Washington lawmakers, including Sen. Charles Schumer (D-NY).
One big takeaway of the event was that the Financial Innovation and Technology for the 21st Century Act (FIT21) could get passed very soon. That would be huge, because this pro-crypto legislation specifically calls for digital assets to be regulated as commodities, and not as securities. That would mean little or no role for the SEC going forward, and a bigger 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. Primarily, this includes Bitcoin mining stocks. For now, it doesn't look good for these companies. Marathon Digital Holdings (MARA 6.53%), for example, has even privately suggested that it will start to move more of its mining operations overseas if the next presidential administration doesn't take a more pro-Bitcoin approach.
And don't forget about Coinbase Global (COIN 7.06%), the world's second-largest cryptocurrency exchange. Any deterioration in sentiment in the crypto market has a direct impact on trading volume and the willingness of investors to put their money into risk assets. The SEC has repeatedly taken action against Coinbase and 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 assume that the Democrats do win the election in November 2024. What then? You shouldn't panic and dump your Bitcoin, of course. But you need to be a lot smarter about how to build a crypto portfolio. For example, you might want to search out green Bitcoin mining stocks such as CleanSpark (CLSK 6.72%) that are using clean energy sources to mine Bitcoin. That idea might have more appeal under an eco-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 be holding my breath waiting for Bitcoin or other cryptos to skyrocket in value.
