Narratives and market movements suggest that crypto is seen as a “Trump trade”. However, there has also been a visible shift in the Democrats’ stance as well as the SEC’s stance toward crypto. The trajectory of change has been set in motion irrespective of election outcomes, providing strong fundamental support for the crypto market.
A favourable shift in the stance of the US political establishment and US regulators toward crypto is a very significant development for the market. Progress in regulation, legislation, and a resolution of outstanding lawsuits in the world’s largest financial market can catalyse the next phase of the bull market as providing clarity, lowering regulatory risk, and legitimising the asset class can unlock substantial demand. In addition, the proposed creation of strategic Bitcoin reserves could create demand shocks.
After Donald Trump’s vocal endorsement, the crypto market came to be seen as a “Trump trade”. Bitcoin initially rallied about +20 percent, but the gains were reversed on Trump’s polling numbers falling, coupled with concerns that campaign promises may not be fully delivered on. The crypto market then surged again as Robert F. Kennedy (RFK) Jr. paused his campaign and endorsed Donald Trump.
Bitcoin price movements vs. the “Trump trade“ narrative

Source: CoinMarketCap
US political pivot
After years of negative newsflow following the SEC’s numerous lawsuits, resistance to providing clear rules, regulation by enforcement, and actions against banks servicing crypto businesses, a string of positive developments surprised the market in May.
Although RFK Jr. had taken a strongly pro-crypto stance from the outset of his presidential campaign, including proposing to back the dollar with Bitcoin, his electoral chances were not seen as strong enough for his vocal support of crypto to impact the market. However, his statements in April that he was the only “person running for president who is pro-crypto” and pledging to fight “for transactional freedom” ultimately catalysed a recognition that crypto was a voter issue.
In May, Donald Trump announced that he would accept crypto donations, and the Democratic Party stopped compelling party members to vote in unison on crypto matters, leading to pro-crypto bills such as FIT-21 gathering substantial bipartisan support.
The first sign of the SEC’s shifting stance came at the end of May, with the sudden surprise approval of the Ethereum spot ETFs.
Recognising the importance to a substantial constituency of voters as well as the opportunity for substantial donations, the Trump campaign ramped up the pro-crypto rhetoric by June. Donald Trump promised to be “the crypto president” and to make sure that in the future, “all Bitcoin is made in the USA.” After key crypto figures embraced Donald Trump, by the end of June, the market started talking about crypto as a “Trump trade”.
Meanwhile, the SEC dropped its investigation into Ethereum 2.0, which—together with the Ethereum ETFs approved as commodity ETFs—implied that the SEC no longer considered Ether a security.
These positive developments eventually catalysed a market rally in July after Donald Trump was announced as a speaker at the Bitcoin Conference—alongside two other presidential candidates, RFK Jr. and Vivek Ramaswamy.
The positive trends were supported by the SEC dropping lawsuits against Paxos and Stacks. However, the rally faded after Biden stepped back as a presidential candidate, and Trump’s polling numbers dropped relative to Kamala Harris.
The crypto market’s recent revival coincided with RFK Jr. endorsing Trump. While it is hard to discern the impact of Trump’s improved electoral chances, as this happened simultaneously with Powell’s dovish Jackson Hole speech and global markets being buoyed by enthusiasm about a soft landing in the US, developments on the US political front with regard to crypto are undoubtedly an important driver of the market.
The Republican stance
The Republican Party has long been more favourably predisposed to crypto than the Democratic Party, but their stance has become strongly pro-crypto recently.
In July, support for the crypto industry was added to the official Republican Party manifesto, stating that “Republicans will end Democrats’ unlawful and un-American Crypto crackdown and oppose the creation of a Central Bank Digital Currency. We will defend the right to mine Bitcoin, and ensure every American has the right to self-custody of their Digital Assets, and transact free from Government Surveillance and Control“.
Donald Trump’s Bitcoin conference speech included promises of ending the “war on crypto“, making changes at the SEC, and building a one-million-Bitcoin reserve. Consequently, Republican Senator Cynthia Lummis introduced strategic Bitcoin reserve legislation (the BITCOIN Act).
More recently, Trump started promoting a new DeFi project that would help the “average American” take a stand against “the big banks and financial elites”.
The Democrats’ stance
As Donald Trump and the Republican Party positioned their stance on crypto as a departure from the policies of the Democrats, the Democratic Party tried to mitigate the impact by reaching out to the crypto industry to formulate a strategy.
Although falling short of the strong rhetoric of the Republicans, the Harris campaign has since promised to support policy efforts to encourage the growth of the cryptocurrency industry, and top Democrats joined a “Crypto4Harris” virtual town hall to show support and recast their party as pro-crypto after years of being viewed as sceptics of the industry. At the event, Senate Majority Leader Chuck Schumer suggested that US crypto legislation could pass the Senate by the end of the year —which would both well exceed the market’s expectation on timing and is also a clear signal of Democratic support for the industry.
Although the much more vocal pro-crypto stance of the Republicans has led the market to conclude that the crypto industry needs a Republican win to be able to thrive in the US, the current administration and the SEC in its current composition have already presided over substantive changes such as the approval of Bitcoin and Ethereum spot ETFs, several “no-action” letters ending lawsuits and investigations, and bipartisan support for crypto bills. The trajectory of positive change has been set in motion irrespective of the election outcome.
Concerns
Although the developments on the US political front are clearly positive, the market’s reaction has been tempered by concerns about using campaign promises to pander to a voter base and the ultimate outcome falling far short—either because of a Democratic win or because delivering on these promises will be crowded out by other priorities.
Despite a positive shift in the Democrats’ stance, divisions remain within the party on crypto matters, and Harris’s advisors include some with a previously anti-crypto stance — although the campaign also appointed crypto alumni, such as ex-Binance and Ripple executives.
Another concern is that the composition of the SEC is not likely to change post-election — unless certain commissioners voluntarily resign. While the president can name a new SEC chairman, this can only be selected from the existing SEC commissioners.
Outlook
While campaign promises should be treated with caution, the trajectory of a positive shift on the US political and regulatory front has been set in motion. Although the Republican rhetoric is far more pro-crypto and very vocally so, the current administration has already delivered real change. Democratic support for the FIT-21 bill, the approval of spot ETFs, and recent no-action letters from the SEC demonstrate that a shift is already happening.
While the positive impact of a Trump administration may be overestimated, as actions may be watered-down versions of campaign rhetoric and the speed of change may be slower than the market would hope for, the positive impact of a Harris administration on crypto policy may be underestimated – although the rhetoric is more muted, it is nonetheless mostly positive, and real, observable change has already occurred.
Ultimately, the trajectory of this shift in the US political and regulatory approach to crypto may provide a catalyst for the market to resume the rally.
Read more about crypto assets from Sygnum here.
Disclaimer: The information in this publication pertaining to Sygnum Bank AG (“Sygnum”) is for general information purposes only, as per date of publication, and should not be considered exhaustive. This publication does not consider the financial situation of any natural or legal person, nor does it provide any tax, legal or investment advice. This publication does not constitute any advice or recommendation, an offer or invitation by or on behalf of Sygnum to purchase or sell any assets. No elements of precontractual or contractual relationship are intended. While the information is believed to be from accurate and reliable sources, Sygnum makes no representation or warranties, expressed or implied, as to the accuracy of the information. Sygnum expressly disclaims any and all liability that may be based on such information, omissions, or errors thereof. Any statements contained in this publication attributed to a third party represent Sygnum‘s interpretation of the data, information and/or opinions provided by that third party either publicly or through a subscription service, and such use and interpretation have not been reviewed by the third party. Sygnum reserves the right to amend or replace the information, in part or entirely, at any time, and without any obligation to notify the recipient of such amendment / replacement or to provide the recipient with access to the information. Simultaneously, there is no obligation of Sygnum to inform recipients of information, if before provided information later becomes outdated, inaccurate or obsolete, unless otherwise provided by applicable law. The information provided is not intended for use by or distributed to any individual or legal entity in any jurisdiction or country where such distribution, publication or use would be contrary to the law or regulatory provisions or in which Sygnum does not hold the necessary registration, approval authorisation or license. Except as otherwise provided by Sygnum, it is not allowed to modify, copy, distribute or reproduce, display, license, or otherwise use any content for commercial purposes.
Sign up for Future Finance
Join our 40,000 strong global community to future proof your investments. Sign up now to be the first to receive our news, product launches, industry reports and educational series.