Bernstein: Shift in Election Sentiment Towards Republican Party, Cryptocurrency to Become "Trump Trade"

According to a report from The Block, research and brokerage firm Bernstein believes that despite recent market corrections, the structural adoption cycle of cryptocurrencies remains intact, and if the election sentiment in the United States shifts towards the Republican Party, cryptocurrencies will become a "Trump trade." Bernstein emphasizes that the new cryptocurrency bull market cycle presents a multi-year opportunity, and the recent weakness may be a buying opportunity on dips. They still maintain their target price of $200,000 for Bitcoin in 2025.

Bitcoin ETF Adoption Rate Expected to Increase in the Second Half of the Year

Since the launch of Bitcoin spot ETF in January, the total net inflow has exceeded $14 billion, which has been a major catalyst for Bitcoin's 75% surge in the first quarter. However, these funds have seen net outflows of nearly $1 billion over the past six consecutive days.

Although some of the Bitcoin ETF inflows are driven by the basis trading between CME futures and spot Bitcoin ETF, indicating that the inflows driven by actual demand may be much smaller. Nonetheless, analysts believe that adoption is adoption, and regardless of the reasons, this has led to increased liquidity in ETFs.

Bitcoin ETF seeing continuous net inflows but not rising? CME short arbitrage hits new high, not here to buy coins

The report also mentioned that many large private banking platforms have not yet whitelisted Bitcoin ETFs, and they are expected to obtain approval in the third/fourth quarter. Currently, Bitcoin ETFs only account for 0.1-0.20% of the existing wealth advisor sample, so there is still room for increased penetration and allocation for new advisors, with Bernstein expecting it to potentially reach 2-3% of portfolios.

Will Ethereum ETF Disappoint?

Another bearish argument in the market currently is that the launch of Ethereum spot ETF will be a "small matter" and its flow will be disappointing compared to Bitcoin. However, while Ethereum ETF may not see as much spot conversion due to the lack of staking functionality, analysts still expect the sources of demand to be similar to Bitcoin ETFs, just on a smaller scale.

Analysts state that Ethereum as a tokenization platform is a stronger use case, whether for stablecoin payments or real-world assets. However, they add that regulatory clarity needs to improve, which could happen as the Republicans win the presidential election in November, with the Trump camp now openly "supporting cryptocurrencies."

"Trump Trade" to Benefit Cryptocurrencies

Bernstein believes that while Ethereum ETF may initially show weakness, if election sentiment shifts towards the Republicans, cryptocurrencies will eventually become a "Trump trade," and hopes for favorable regulatory regimes will change the narrative surrounding blockchain use cases, drawing attention to ETH.

Bernstein believes that the new cryptocurrency bull market cycle is a multi-year opportunity, and the recent weakness may present buying opportunities. They still maintain a target price of $200,000 for Bitcoin in 2025.