SUMMARY

• Despite Kamala Harris’s positive remarks, the crypto community still seeks clearer policies and action, according to Bernstein analysts.
• Analysts suggest that crypto market sentiment would be stronger under a Trump victory, given the current administration’s uncertain stance.

Bitcoin has risen by around 10% over the past week, with Ethereum showing more grounded gains of 17%. Analysts from Bernstein, a research and brokerage firm, have recognized five key reasons behind this rally and what might happen following. One major factor is the potential for bipartisan crypto support, as Vice President Kamala Harris, amid a Wall Street fundraiser, communicated her expectation to empower crypto business while safeguarding consumers. This stamped her first explicit mention of “digital resources,” contrasting with Donald Trump’s more aggressive “America as crypto capital” position, including guarantees of a friendly SEC chair, a national Bitcoin stockpile, and support for Bitcoin mining in the U.S.

Despite the relief felt by the crypto community from both candidates signaling support, there remains critical concern around the current administration’s troubled history with the industry. Issues like Congressperson Elizabeth Warren’s “anti-crypto army” messaging, crypto firms being cut off amid the 2023 banking crisis, and progressing SEC litigation have cleared out the community seeking more policy clarity from Harris. Bernstein analysts accept that sentiment within the crypto market would be more grounded under a Trump victory, as it could mean a new policy begin with broader regulatory backing for DeFi, NFTs, and resource tokenization beyond Bitcoin.

Regardless of the election result, institutional energy around Bitcoin and Ethereum is anticipated to proceed, driven by exchange-traded funds (ETFs). Bitcoin ETFs have seen a net influx of $397.2 million over the last week, with total inflows presently roughly $17.7 billion. Ethereum, whereas struggling in a few regions, has also shown solid performance with $2.2 billion in inflows to new ETFs. Loosening monetary policy from the Federal Reserve has moreover reinforced the rally, as Bitcoin tends to respond emphatically to signals of a weaker U.S. dollar. As U.S. monetary debt climbs to $35 trillion, Bitcoin is progressively seen as a non-sovereign resource associated to gold, advertising a hedge against government monetary excess.

The recuperation of the Bitcoin mining industry post-halving and diminishing fears over major Bitcoin sell-offs are also vital to the market’s quality. Surviving mineworkers have stabilized, bringing hash control back to pre-halving levels. Also, fears of Bitcoin offering by governments and from the Mt. Gox distributions have to a great extent been absorbed by the market. With companies like MicroStrategy proceeding to purchase more Bitcoin, the demand side remains vigorous, further supporting the rally.

As Bernstein notes, the crypto market’s future depends on clearer policy course, particularly from Harris, although sentiment might strengthen essentially under Trump, where regulatory support might grow, fueling development and market growth.