Over the weekend, bitcoin initially traded lower on news that President Biden will not seek a second term. But the largest cryptocurrency later rallied as markets came to grips with the fact that Vice President Kamala Harris is the likely Democrat nominee.
It’s only been a matter of days since Biden dropped out. And it’s not official that Harris will be the Democrat nominee. That will be determined at the party’s convention in Chicago, which runs Aug. 19-22. For now, it appears that crypto investors are at peace with a Harris/former President Donald Trump matchup. That could be beneficial to spot bitcoin ETFs like the VanEck Bitcoin ETF Trust (HODL).
HODL, which debuted in January, is up nearly 5% over the past month — a period including an assassination attempt on Trump, the Republican National Convention, and Biden’s departure from the presidential race. Love him or hate him, some market observers see bitcoin setting up to be part of the “Trump trade.”
There’s some credibility in that thesis. That’s because the former president has warmed to bitcoin in recent years. And Sen. J.D. Vance (R-OH) — the GOP vice presidential nominee — is a known bitcoin backer. That indicates HODL and its peers could be in for more near-term upside.
HODL Could Get Trump Bump
Obviously, there’s still more than three months until Election Day. And the winds of political fortune can shift within a day. But some crypto analysts believe Trump’s recent polling success has been a catalyst for bitcoin and ETFs such as HODL.
“’The Trump Trade’ has become a major catalyst to a sustained move higher from here, with investors going long energy, banks and bitcoin,” according to a recent report by Zero Cap analysts. “Trump has said he’ll release Ross Ulbricht, Silk Road Founder serving two life sentences, and has stated that he wants to enable innovation in the crypto space through looser regulation.”
A new era of crypto innovation has the potential to benefit ETFs such as the VanEck Digital Transformation ETF (DAPP). The fund, which tracks the MVIS Global Digital Assets Equity Index, holds shares of companies with clear ties to the crypto economy. A new wave of crypto innovation could unlock new revenue streams for DAPP holdings and potentially reduce those stocks’ dependence on bitcoin bullishness to notch their own moves to the upside.
There’s also speculation Trump could deem bitcoin to be a strategic reserve asset for the U.S. government. That means the government would buy it, hold it, and be unlikely to sell it. For now, that might be a stretch. But it is clear that at least one presidential candidate is pro-bitcoin. And that could compel the other to follow suit.
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