Bitcoin miners and crypto companies see opportunities, while foreign rivals may suffer under a second Trump term.
The possible reelection of Donald Trump to the U.S. presidency could bring significant changes to the cryptocurrency market. According to analysts and market participants, Bitcoin miners and cryptocurrency companies, which have faced obstacles in going public in the U.S., could be the big winners under a second Trump term. In contrast, foreign companies might face greater challenges.
A recent CBS News poll shows Trump with 52% voter intention in a probable rematch against current President Joe Biden. However, the electoral landscape is uncertain, as Biden announced he will not seek reelection and has endorsed Vice President Kamala Harris as the Democratic candidate.
Bitcoin Miners
Since Biden’s poor debate performance in June and the failed assassination attempt against the Republican nominee, the price of Bitcoin has risen almost 10%. The biggest market reactions have been seen in the shares of companies that validate transactions on Bitcoin’s blockchain.
In June, Trump met with Bitcoin miners and later on his Truth Social account mentioned that Bitcoin mining could be “our last line of defense against a central bank digital currency (CBDC).” He also expressed his desire for all remaining Bitcoin to be “MADE IN THE USA!!!”
Shares of Marathon Digital and Riot Platforms, two of the largest publicly traded firms, have surged around 30% during this period. Cipher Mining has risen nearly 50% and is exploring a potential sale after receiving acquisition interest, according to people familiar with the matter.
IPO Candidates
In a scenario once thought impossible after the 2022 crypto market collapse, companies in the sector are once again planning initial public offerings (IPOs). Circle, the issuer of the approximately $33 billion stablecoin USDC, filed for an IPO in January after scrapping an earlier attempt. Northern Data, a company that transitioned from crypto mining to artificial intelligence computing, is considering a U.S. listing with a valuation of up to $16 billion. Kraken, the second largest U.S.-based crypto exchange, is also gearing up for an IPO.
Dealings in digital assets have been one of the main obstacles for these companies to get approval from the U.S. Securities and Exchange Commission (SEC). The agency lists several tokens as unregistered securities, and its chair, Gary Gensler, has been criticized by prominent crypto figures such as Brian Armstrong, CEO of Coinbase, for crackdowns and lawsuits against crypto firms under his leadership. Trump is expected to appoint a more crypto-friendly SEC chair.
Digital Exchanges
A second Trump term could lead to a banking system more accepting of crypto firms. Digital asset trading platforms have seen a dwindling pool of banks available for fiat-to-crypto conversions. The bankruptcy of crypto-friendly banks like Silvergate and Signature has further limited crypto firms’ access to banking services.
Foreign Rivals
While most industry participants would celebrate a Trump win, some companies could face adverse effects. Foreign crypto firms, especially trading platforms like Binance, OKX, and Deribit, have gained market share as strict regulation prevents U.S. rivals from launching some of the most popular services. With more crypto-friendly regulators and a clear legal framework, U.S.-based companies could launch trading services with more leverage or crypto options and futures contracts with more expiration dates.
Another potential loser could be the Chinese conglomerate Bitmain, the largest Bitcoin mining machine manufacturer. Trump’s trade rhetoric towards China and his ambition for all remaining Bitcoin to be produced in the U.S. could present more challenges for the company. This is especially true with U.S. competitors like Block and Auradine selling large amounts of new chips or machines to mining companies.
Central Bank Digital Currencies (CBDC)
Central bank digital currencies (CBDCs) are an easy target for Trump. Many crypto participants see CBDCs as a way for the government to increase financial surveillance on its citizens. Trump has vowed never to allow the dollar to be digitized.
In conclusion, a second Trump administration could redefine the crypto market landscape, benefiting domestic companies while posing significant challenges for foreign rivals and the advancement of CBDCs.
By Orlando J. Gutiérrez