By Joe Light
Bitcoin hit a new record high, briefly topping $74,000 as traders appeared to see improving odds for former President Donald Trump to win the presidency.
Bitcoin as of 10:20 p.m. Eastern was at $73,880, spiking from around $69,000 in the late afternoon. The token briefly crossed $74,000 earlier. Many crypto investors have rooted for Trump to defeat Vice President Kamala Harris, since the former president has promised to promote the crypto industry in the U.S. if he wins.
The Associated Press quickly called Florida for Trump on Tuesday evening, as Trump built significantly on his margin of victory over President Joe Biden four years ago. Trump also showed early strength in Georgia and North Carolina, thought those states were still counting votes and were too early to call.
Crypto investors seem to be preparing for far more volatility after the election. A CF Benchmarks index, which uses futures activity to gauge how much volatility investors expect in Bitcoin over 30 days, on Monday hit its highest level since early August.
Generally, it’s believed that Trump would give the most support to Bitcoin. Trump attended a major Bitcoin conference over the summer, where he promised to make the U.S. “the crypto capital of the world” and to hold Bitcoin for strategic purposes. He’s also promised to oust Securities and Exchange Commission Chair Gary Gensler in favor of a more crypto-friendly regulator.
In the short-term, that will likely mean Bitcoin prices get a boost if Trump wins the election. The price of the largest cryptocurrency over the next two months could rise above $80,000 if Trump wins, Bernstein analysts led by Gautam Chhugani said in a research note on Monday. If Harris wins, prices could fall to $50,000, they wrote.
The Harris campaign has said that the vice president supports creating “a regulatory framework” for crypto trading, but she hasn’t been nearly as outspoken on the subject.
In the longer term, however, any dip in the event of a Harris win might just be a head fake, said Stéphane Ouellette, CEO of digital assets platform FRNT Financial. Ouellette notes that Bitcoin in recent months has been driven much more by macroeconomic catalysts, such as the Federal Reserve, than by politics.
“The election is near-term noise,” said Ouellette. “Ultimately both of these candidates are pledging for spending to move aggressively forward while interest rates are going lower.” Both those factors, he said, are conducive to higher Bitcoin prices.
Where the election could make a bigger long-term difference is for crypto trading platforms like Coinbase Global. Coinbase is pushing for Congress to pass bills that company executives say would make clear what rules the company must follow to facilitate crypto trading in the U.S. The SEC under Gensler is also suing Coinbase and other trading platforms for allegedly operating as unregistered exchanges. Coinbase denies that it is breaking the law.
In the event of a Trump victory, the prices of Coinbase and other crypto-tied companies could rally on the expectation that the U.S. might pull back on enforcement.
“Trump getting in is more bullish to the ecosystem,” Ouellette said. “For Bitcoin itself, the underlying fundamentals are pretty well ingrained.”
Write to Joe Light at joe.light@barrons.com
This content was created by Barron’s, which is operated by Dow Jones & Co. Barron’s is published independently from Dow Jones Newswires and The Wall Street Journal.