Crypto community seeks more clarity from Harris, sentiment under Trump win would be stronger: Bernstein
With bitcoin up around 10% over the past week and ether showing relative strength with 17% gains, analysts at research and brokerage firm Bernstein outlined five key reasons for the rally — and what to expect moving forward.
One of those factors is potential bipartisan crypto support, with Democratic candidate and current Vice President Kamala Harris saying she'll encourage crypto business while protecting consumers at a Wall Street fundraiser over the weekend.
“This is the first explicit statement by Harris on crypto, where the word ‘digital assets’ was mentioned in a statement,” Gautam Chhugani, Mahika Sapra and Sanskar Chindalia wrote in a note to clients on Monday. “This is obviously in contrast to Trump’s overt ‘America as crypto capital’ stance with specific policy promises — friendly SEC chair, bitcoin national stockpile, support for Bitcoin BTC +0.89% mining in America, stablecoins regulation, etc. Regardless, the crypto community did feel some relief with both candidates signaling support.”
However, given the current administration’s “tumultuous” history in the space, including the “anti-crypto army” messaging of Democrat Senator Elizabeth Warren, cutting off crypto firms during the 2023 banking crisis and ongoing SEC litigation against several companies in the industry, the crypto community “seeks more policy clarity and follow through from the Harris side, to swing their political view,” the analysts said.
“We continue to believe, the crypto market sentiment under a Trump win would be stronger, since it would indicate a fresh policy start and likely broader regulatory support for DeFi/asset tokenization/NFTs, beyond bitcoin,” they added.
Harris currently leads Trump by 52% to 47%, according to the elections forecast market on the decentralized predictions platform Polymarket. National poll averages show Harris leading 48% to 46%, according to Bernstein.
ETF flows and loosening monetary policy
Regardless of the election outcome, with exchange-traded funds now live for Bitcoin and Ethereum ETH +2.39% , institutional momentum should continue for major crypto assets, the analysts noted, providing another driver for the current rally. The spot Bitcoin ETFs have remained net positive despite choppy price action over the past few months, adding a further $397.2 million in net inflows last week, with total net inflows now at $17.7 billion.
While struggling in comparison, with total net outflows of $608 million, the spot Ethereum ETF picture is more nuanced, with strong net inflows of $2.2 billion into the new ETFs currently overpowered by $2.8 billion worth of net outflows from Grayscale’s converted and higher-fee incumbent fund, ETHE.
“We believe, new approvals by wirehouses (recently Morgan Stanley went live) would continue and with some gestation period for advisors to solicit clients, we expect reacceleration of inflows,” the analysts said.
The U.S. Federal Reserve’s 50 basis point interest rate cut is another obvious factor, with bitcoin also reacting with a lag to gold's all-time highs, according to Chhugani, Sapra and Chindalia. Any further signal of looser monetary policy and a potentially weaker U.S. dollar is positive for bitcoin, they said. “In addition, with U.S fiscal debt scaling new highs at ~$35 trillion (adding $1 trillion debt every 100 days), bitcoin is seen as an alternative non-sovereign asset holding relative value (similar to gold), if the government continues its fiscal excess,” they added.
U.S. fiscal debt. Image: Bernstein.
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