If Trump returns to the White House, could Bitcoin hit new highs?

Holding Bitcoin could be the latest example of a "Trump trade" that could lead to big gains if the former U.S. president returns to the White House.

Bernstein analysts said in a report on Monday that Trump's recent enthusiasm for the cryptocurrency industry suggests that a potential Trump administration will be more friendly to digital assets than a Harris administration. "Crypto is one of the very few cases where the difference in election results could determine the fate of the industry," said Bernstein analyst Gautam Chhugani.

Trump's friendly attitude towards the cryptocurrency industry has been going on for years. Trump gave a 45-minute speech at the Bitcoin Conference in July and talked about cryptocurrency policy in almost every speech. He has also released several NFT portfolios in the past two years.

At the Bitcoin Conference, Trump said he would develop a plan to "ensure that the United States becomes the global cryptocurrency capital and the world's Bitcoin superpower."

Chhugani predicts that if Trump wins the election, Bitcoin could soar to new highs later this year, and the cryptocurrency could trade between $80,000 and $90,000 by December, representing a potential gain of up to 59%. Bitcoin peaked just below $74,000 in March.

As for why Bitcoin has so much upside potential if Trump wins in November, Chhugani believes that the market has yet to price in a favorable regulatory environment for cryptocurrencies.

“Decentralized finance has not received the involvement of institutions and banks to build blockchain-based financial products due to the huge regulatory challenges,” Chhugani explained.

He added, “A favorable regulatory environment would remove the policy risks of financial institutions and banks participating, thereby removing barriers for digital assets to compete with traditional assets for institutional funding flows.”

The report states that loosening cryptocurrency regulations could spur innovation in the space and attract users back to the ecosystem. Bitcoin may be gradually pricing in a potential Trump win in November, with the cryptocurrency up 34% year to date. Chhugani concluded:

“The election outcome remains unpredictable, but if you are bullish on cryptocurrencies, you are likely trading on Trump.”