Bernstein says crypto is 'no longer a bipartisan issue' amid Trump's Bitcoin promises and Harris' 'late' olive branch

As the crypto industry becomes increasingly prominent in the run-up to November’s U.S. presidential elections, analysts at research and brokerage firm Bernstein looked at how the candidates’ positions may influence the market.

Former President Donald Trump spoke at the Bitcoin 2024 conference in Nashville over the weekend, making six major promises to the crypto industry if elected, Bernstein's Gautam Chhugani, Mahika Sapra and Sanskar Chindalia noted in a memo to clients on Monday:

1. The U.S. will lead the world in Bitcoin and crypto.
2. The U.S. will become a "Bitcoin mining superpower," promising increased electricity generation capacity for the industry.
3. Securities and Exchange Commission Chair Gary Gensler, often critical of the industry, will be fired on day one and replaced with a “crypto-friendly” SEC Chair.
4. The U.S. will not create a central bank digital currency (CBDC), ensure a clear right to self-custody and no censorship of crypto transactions.
5. The U.S. will introduce a stablecoin framework to promote a digital dollar as a global standard and enable cross-border payments.
6. The U.S. will not sell the estimated 213,246 BTC it holds in seized assets — equivalent to nearly $15 billion — and will use it to form the basis of a “national strategic bitcoin stockpile” for the country’s bitcoin holdings and acquisitions.

“A national bitcoin strategic reserve has implications on how nation states would adopt bitcoin as a ‘store of value’, and build bitcoin reserves similar to gold reserves,” the analysts wrote.

Senator Cynthia Lummis, R-Wyo., followed Trump on stage, announcing she will introduce a bill to direct the U.S. Treasury to purchase 1 million bitcoins over five years — worth about $69 billion at current prices — next week.

“I believe Trump's watershed decision to support a strategic bitcoin reserve may mark a pivotal moment of no return for our industry — we are crossing the Rubicon,” Framework Ventures co-founder Vance Spencer told The Block. “To play it out, if Trump regains the presidency and actually implements this policy, even partially, he will have effectively initiated a new space race, compelling every country, every financial institution, to at least consider gaining some exposure to this asset.”

Harris' olive branch is a 'tad late'

While Harris did not speak at the event, sources recently indicated to The Block that the vice president could be  extending an olive branch to the crypto industry, signaling an intent to reset the relationship, adding that the team didn’t know much about the industry.

Similar stories have followed, with the FT reporting on Friday that members of Harris' team have contacted people at crypto exchange Coinbase, stablecoin company Circle and blockchain payments firm Ripple about setting up meetings in recent days.

Voices within the Democrat circle also called on the Democratic National Committee and prospective presidential candidates on Friday to make amends for the past regulatory actions against the crypto industry, citing the more than 52 million estimated crypto holders in the U.S. being material enough to impact close elections.

The letter suggested that 20% of voters in key battleground states identified crypto as a major issue in the 2024 elections and crypto super PAC Fairshake, backed by Coinbase, Ripple, a16z crypto and the Gemini co-founders Cameron Winklevoss and Tyler Winklevoss, among others, has now raised $200 million to support crypto-friendly candidates — the largest super PAC this election cycle.

“We believe this olive branch is a tad late and the industry would seek more concrete action (reversal of previous wrongs) before warming up to the Democrat campaign,” the Bernstein analysts said.

'Crypto is no longer a bipartisan issue,' bitcoin and related stocks set to benefit

“The crypto community and industry seem clear that crypto is no longer a bipartisan issue,” the analysts added, citing the way bitcoin has been trading, rising as the odds of a Trump presidency increase and trading range bound as President Joe Biden endorsed Harris as his potential replacement as the Democratic nominee. “We believe the crypto markets will trade completely top-down on political developments until the election results in early November."

Chhugani, Sapra and Chindalia added that any such “Trump trade” into the U.S. election should involve a greater allocation to bitcoin and bitcoin-related stocks. This includes public miners such as Riot Platforms, CleanSpark, IREN and Core Scientific, after Trump signaled his clear support for the U.S. mining industry, as well as MicroStrategy, which holds 1.1% of bitcoin’s total 21 million supply on its balance sheet, they said.

Decentralized predictions platform Polymarket currently has odds of a Trump presidential election victory at 60% compared to 38% for Kamala Harris.

Chhugani maintains long positions in various cryptocurrencies. Bernstein and its affiliates expect to receive compensation for investment banking services from MicroStrategy in the next three months. Certain Bernstein affiliates also act as market makers or liquidity providers in the debt securities of Riot Platforms.