Bernstein: Republican Win May Boost Crypto as Top ‘Trump Trade’

If the election sentiment shifts more Republican, crypto would end up as the primary 'Trump trade' and hopes of a favourable regulatory regime would change the 'use-case' narrative around blockchains such as ETH.

Key Insights

  • Bernstein analysts maintain a bullish long-term outlook on crypto despite recent bearish sentiment.
  • The report addresses concerns over recent Bitcoin ETF outflows and potential underwhelming Ethereum ETF launch.
  • Analysts view near-term market weakness as an opportunity for attractive entry points, maintaining a $200,000 Bitcoin price target by the end of 2025.

NEW YORK (MarketsXplora) – Despite recent bearish sentiment in the cryptocurrency market, analysts at Bernstein maintain that the structural adoption cycle remains robust, with potential for crypto to become the primary “Trump trade” if U.S. election sentiment shifts towards Republicans.

In a note to clients on Monday, Bernstein analysts Gautam Chhugani and Mahika Sapra addressed concerns stemming from recent outflows in spot Bitcoin exchange-traded funds (ETFs) and expectations of a potentially underwhelming spot Ethereum ETF launch.

“After months of Bitcoin ETF euphoria, the market suddenly feels bearish,” the analysts wrote, noting that spot Bitcoin ETFs are currently on a six-day streak of consecutive $100 million-plus net daily outflows, totaling nearly $1 billion.

However, Chhugani and Sapra emphasized that the overall success of spot Bitcoin ETFs, which have generated more than $14 billion worth of net inflows since their January launch, remains a key driver of Bitcoin’s 75% rise in the first quarter.

The analysts expect a temporary pause before large private bank platforms whitelist Bitcoin ETFs, a development they view as a “real game-changer” for portfolio allocations. “We expect these approvals to come through in Q3/Q4 and until then the markets would drag,” they added.

Regarding Ethereum ETFs, while the analysts acknowledge they may not see as much spot conversion due to the lack of a staking feature, they still anticipate demand, albeit at a lower scale compared to Bitcoin ETFs.

Bernstein’s team also highlighted Ethereum’s potential as a tokenization platform for stablecoin payments and real-world assets, contingent on improved regulatory clarity. They suggest this clarity could improve under a Republican presidential victory in November, with the Trump camp now overtly “pro-crypto.”

“If the election sentiment shifts more Republican, crypto would end up as the primary ‘Trump trade’ and hopes of a favourable regulatory regime would change the ‘use-case’ narrative around blockchains such as ETH,” Chhugani and Sapra stated.

Read also! Donald Trump may speak at the Bitcoin 2024 conference in Nashville

The analysts concluded by reaffirming their belief in a multi-year crypto bull cycle, viewing near-term weakness as “another opportunity to find attractive entry levels.”

This outlook aligns with Bernstein’s recent prediction that spot Bitcoin ETFs are nearing approval at major wirehouses, maintaining a $200,000 bitcoin price target by the end of 2025.

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