Why Kamala Harris win unlikely to rock Bitcoin price

As the 2024 U.S. presidential election draws near, the crypto sector remains on edge, facing the potential for significant policy shifts. Analysts predict that the outcome, whether a Kamala Harris or Donald Trump presidency, could affect cryptocurrency values and regulations in the United States, the world’s largest economy.

Observers, crypto traders, and investors weigh in on the potential repercussions for Bitcoin, altcoins, and the broader digital asset landscape.

1. The Potential Impact of a Harris Administration on Bitcoin and Altcoins
The crypto sector faces an uncertain path under Vice President Kamala Harris’s potential administration. Analysts at Bernstein, a private wealth management firm, project that a Harris-led government might push Bitcoin’s value down in the near term. According to their forecast, her administration could see Bitcoin face headwinds by the year-end. This prediction aligns with the view that Harris’s alignment with President Joe Biden’s administration might signal a continued stance that has been perceived as “anti-crypto” by many investors.

Yet, for some in the crypto space, Harris’s presidency wouldn’t spell the end of a bull market. Notably, Crypto Rand, a pseudonymous crypto trader, told Cointelegraph that Bitcoin and altcoin markets would likely see an upward trend in late 2024, extending into early 2025. “If Harris gets elected, there will be a bump on the road, but the trend will continue,” he said, adding that Bitcoin might face a temporary dip of 5% to 10%. Despite this, he views such fluctuations as short-term disruptions rather than a long-lasting trend shift.

2. Liquidity and Policy Changes That Could Shape Crypto Prices
Experts believe that policy changes influencing global liquidity will heavily impact the crypto sector. Youwei Yang, chief economist at Bit Mining, emphasizes the importance of monitoring monetary liquidity, suggesting that easier monetary policies could attract “hot money” into risk assets like Bitcoin and other cryptocurrencies. He argues that a Harris administration adopting a more accommodative Federal Reserve approach could bolster the sector. If realized, Yang believes this approach would balance any regulatory setbacks, supporting Bitcoin prices in the long term and potentially driving them to $120,000.

Correlation between Bitcoin price and global liquidity. Source: Lyn Alden


However, a second term for Donald Trump might yield an even higher valuation for Bitcoin, with Yang forecasting a price increase to around $135,000. Yang’s analysis underscores a crucial point: more liquidity in the economy could drive substantial gains in cryptocurrency prices, regardless of regulatory tightening under any administration. The correlation between Bitcoin and global liquidity flows, as highlighted by Lyn Alden’s research, reinforces this perspective.

3. Fear of Ambiguity: Harris’s Lack of a Clear Crypto Roadmap
One of the lingering uncertainties surrounding Kamala Harris’s candidacy is her unclear stance on cryptocurrency. Venture capitalist Tim Draper expressed concerns over the current regulatory ambiguity in the United States, warning that the “fear wave” from lacking clear policies could hinder the industry’s potential. “Whoever wins must avoid imposing regulations on an industry that may define the global economy for the next three decades,” Draper shared with Cointelegraph. He argues that the regulatory environment should foster innovation rather than stifle it, encouraging the U.S. to compete with countries like Singapore and the United Arab Emirates that offer regulatory clarity.

Crypto Rand added that the absence of a clear policy “plants the seed for uncertainty” in the sector. “Uncertainty can be worse than opposition because companies don’t know what to expect next, and they bleed slowly,” he warned. Draper’s sentiment echoes through the industry, as investors and startups alike weigh the potential risks of remaining in the U.S. under a Harris administration. Several crypto companies have already opted to move operations offshore in response to the existing regulatory climate, with nations like El Salvador and Argentina becoming increasingly attractive to blockchain innovators.

Erik Finman, a Bitcoin millionaire and crypto entrepreneur, criticized the Biden administration’s executive order on digital assets, calling it “terrible for crypto.” He believes that Harris’s administration could follow suit, maintaining an approach seen as detrimental to crypto progress in the U.S. For Draper and other investors, the U.S. government’s regulatory direction will be pivotal, determining whether the nation remains a favorable environment for crypto innovation or faces a significant talent and capital exodus.

4. The SEC's Role: Could New Leadership Alter the Crypto Sector’s Trajectory?
Another factor influencing the crypto sector’s future is the role of the Securities and Exchange Commission (SEC) and its leadership. Current SEC Chair Gary Gensler has faced criticism for what many in the industry see as a “regulation by enforcement” approach. Crypto Rand highlighted Gensler’s tenure as a “burden” on the U.S. crypto industry, stating, “A change at the head of the securities supervisor would signal the end of an era of blatant overreach.” His remarks reflect the sentiment of a large portion of the crypto community, which feels stifled by the SEC’s rigid regulatory actions.

Donald Trump, who has publicly stated his intention to remove Gensler on his first day in office, would need to navigate legal constraints to enact such a change. However, a Harris administration might offer a different path. While Harris hasn’t made any official statements regarding Gensler’s position, sources close to her campaign have suggested his role may not be secure. Billionaire investor Mark Cuban suggested that Harris’s team leans toward clear regulatory guidelines rather than punitive enforcement. “My guess is that, based on the lack of public support for him, that he is gone,” Cuban told Cointelegraph.

Cuban, along with Draper, advocates for an updated approach to securities regulation that moves beyond the 80-year-old Howey rule, a standard they believe is ill-suited for digital assets. An incoming administration willing to establish “bright line regulations” could provide the transparency the crypto sector needs to thrive domestically, according to Cuban. This viewpoint aligns with Draper’s, who emphasizes that a modernized regulatory framework would encourage crypto companies to stay in the U.S. rather than relocate to countries offering clearer compliance pathways.

The Stakes for the U.S. Economy in Retaining Crypto Talent
While some crypto firms have already migrated to more favorable regulatory environments, the U.S. remains a major player in the global crypto economy. With a GDP of $29.17 trillion, as reported by the International Monetary Fund, the U.S. market is a lucrative space that most companies are hesitant to abandon. Yet, without a supportive regulatory climate, crypto companies may increasingly look elsewhere. According to Rashan Colbert, head of policy at the decentralized trading platform dYdX, “other nations are moving faster than the U.S.,” a trend he believes future U.S. administrations must address if they want to sustain competitiveness.

Top 10 ranked countries in the Henley Crypto Adoption Index 2024. Source: Henley & Partners


Countries like the UAE, Singapore, and Hong Kong have already advanced their regulatory frameworks for digital assets, landing them top spots on the Henley Crypto Adoption Index for 2024. The U.S., ranking below these nations, risks losing its position as a global crypto hub if a more favorable environment does not emerge.

As the 2024 U.S. presidential race intensifies, the crypto sector remains watchful, with both regulatory clarity and liquidity playing crucial roles in shaping its future. Investors, policymakers, and stakeholders await the election’s outcome, which could either open new avenues for growth or exacerbate challenges for the U.S. digital asset landscape.

Reference
https://cointelegraph.com/news/kamala-harris-bitcoin-price-crypto-fear?utm_source=rss_feed&utm_medium=rss&utm_campaign=rss_partner_inbound