Cryptocurrency stocks in the U.S. saw declines in early trading on Wednesday following a contentious presidential debate where Democratic contender Kamala Harris challenged her Republican rival, Donald Trump, who is known for his pro-crypto stance.
Trump, who has championed Bitcoin and positioned himself as a friend to the crypto industry, had previously criticized the current administration for its regulatory approach. In contrast, Harris has not yet laid out a detailed crypto policy.
Pop icon Taylor Swift added to the turbulence by announcing her support for Harris on Instagram, where she has a massive following of 280 million. This endorsement, coupled with Harris’s debate performance, appears to have reduced the likelihood of a crypto-friendly Trump returning to the White House, according to Susannah Streeter, head of money and markets at Hargreaves Lansdown.
The probability of a Harris victory rose to 56% from 53% before the debate, while Trump’s odds dropped to 48% from 52%, based on betting data from PredictIt.
Despite the debate not addressing cryptocurrency directly, the market responded to the shift in sentiment. Bitcoin, the largest cryptocurrency by market cap, reduced its losses to 2%, while Ethereum fell by 2.6%. Earlier in July, Trump had expressed strong support for Bitcoin, promising favorable regulation and suggesting that his administration would consider holding Bitcoin as a reserve asset.
Meanwhile, Harris has yet to articulate her stance on digital currencies. Analysts had been closely monitoring Bitcoin’s performance for signs of which candidate might be gaining traction.
Valentin Fournier of BRN Research noted that although the debate didn’t focus on crypto, market sentiment now seems to favor Harris, potentially leading to a more cautious outlook for Bitcoin compared to Trump’s earlier optimistic projections made at the Bitcoin 2024 Conference.
The crypto market remains highly volatile and faces scrutiny from the U.S. Securities and Exchange Commission over potential securities law violations. However, it has gained increased mainstream acceptance with endorsements from Wall Street institutions and corporate figures like Elon Musk, alongside the approval of U.S. exchange-traded crypto funds.
As uncertainty lingers, particularly with the presidential election approaching in November, the impact on risk assets like cryptocurrencies is expected to continue. Major crypto miners such as Riot Platforms, Marathon Digital, and Hut 8 saw declines ranging from 3.6% to 5.3%. Additionally, MicroStrategy, a notable Bitcoin buyer, fell by 5.4%, while Coinbase Global and Bitfarms experienced drops of 3.6% and 3.8%, respectively.
