Blockchain
Jefferies believes Trump’s ‘overt’ support for Bitcoin will boost crypto stocks and gold miners
Analysts at Wall Street investment bank Jefferies believe that the former president by Donald Trump “overt support” for Bitcoin and cryptocurrencies, combined with higher expected inflation, larger fiscal deficits and political pressure on the Federal Reserve, could weaken the dominance of the US dollar as a reserve of wealth.
Analysts said in a research report shared on social media on July 19 that such an environment would be highly favorable for cryptocurrency-related stocks and gold miners. The phenomenon is already in play with cryptocurrencies and the broader market recovering after Trump survived an assassination attempt.
As Trump’s prospects in the 2024 presidential election rise, these policies are becoming increasingly relevant to investors. The former president has expressed strong support for the sector, with the Republican Party following suit by incorporating Bitcoin Rights in its new platform.
Jefferies highlighted five key policies proposed by Trump that could have a significant impact on the stock market, with a particular focus on the benefits this would bring to cryptocurrencies.
Pro-Crypto Policies
According to Jefferies, Trump’s plan to extend the benefits of the Tax Cuts and Jobs Act (TCJA), which expires next year, should continue to provide tax relief for businesses and individuals. This extension could increase consumer spending and corporate profitability, indirectly benefiting digital-related sectors by increasing disposable income and investment.
Trump has also proposed further reductions in corporate tax rates, which could significantly improve the profitability of US companies. This policy is likely to stimulate market optimism and lead to increased investment in various sectors, including those associated with cryptocurrencies.
Additionally, Trump’s intention to increase tariffs, particularly on Chinese goods, could lead to higher U.S. inflation and disrupt global trade dynamics. Jefferies noted that this policy could push investments into alternative currency assets, such as cryptocurrencies and gold, as investors seek hedges against inflation and currency devaluation.
Additionally, a potential rollback of climate initiatives coupled with expanded oil drilling could benefit the energy sector but could negatively impact clean energy companies. However, this policy could also indirectly benefit cryptocurrencies by reducing regulatory pressure and promoting a more favorable investment environment for energy-intensive Bitcoin mining operations.
Jefferies also highlighted Trump’s plans to reduce involvement in global conflicts, such as the Russia-Ukraine war, which could reduce geopolitical risks and contribute to market stability. This move should benefit sectors that have a negative correlation with traditional commodity prices, further increasing the attractiveness of cryptocurrencies as a stable investment option.
Actions to take advantage of
Jefferies has identified several cryptocurrency-related stocks that could benefit significantly from these policies, including: Monetary base AND Microstrategydue to their direct involvement with Bitcoin and cryptocurrencies, as well as with nearly all major public Bitcoin miners, including Digital Marathon, Riot platformsAND Cipher extractionamong others.
The list also includes CME GroupSquare and Payment via PayPalwhich recently launched its own stablecoin and has significantly increased its presence in the cryptocurrency sector in recent years.
According to the report, these companies are set to benefit from an environment where the US dollar’s attractiveness is declining and digital currencies are gaining traction as a store of value.
Jefferies stressed the importance of investors staying informed and adapting their strategies to these potential policy changes. The expected support for cryptocurrencies under a Trump administration could present significant growth opportunities in the cryptocurrency sector.