Wall Street investment bank Jefferies analysts believe former President Donald Trump’s “overt support” for Bitcoin and crypto, combined with anticipated higher inflation, larger fiscal deficits, and political pressure on the Federal Reserve, could undermine the US dollar’s dominance as a store of wealth.
The analysts said in a research report shared on social media on July 19 that such an environment would be highly favorable for crypto-related stocks and gold miners. The phenomenon is already in play with crypto-stocks and the wider market rallying after Trump survived an assassination attempt.
As Trump’s prospects in the 2024 presidential election rise, these policies are becoming increasingly relevant for investors. The former President has voiced 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 significantly impact the equities market, with a particular focus on the benefits it would have for crypto-stocks.
Pro-crypto policies
According to Jefferies, Trump’s plan to extend the benefits of the Tax Cuts and Jobs Act (TCJA), which are set to expire next year, is expected to continue providing tax relief for businesses and individuals. This extension could boost consumer spending and corporate profitability, indirectly benefiting sectors related to digital assets by increasing disposable income and investment.
Trump has also proposed a further reduction in corporate tax rates, which could significantly enhance the profitability of US companies. This policy is likely to drive market optimism and lead to increased investment in various sectors, including those associated with crypto.
Additionally, Trump’s intention to increase tariffs, particularly on Chinese goods, could result in higher US inflation and altered global trade dynamics. Jefferies noted that this policy may drive investment towards alternative currency assets, such as crypto and gold, as investors seek hedges against inflation and currency devaluation.
Furthermore, a potential rollback of climate initiatives, coupled with expanded oil drilling, could benefit the energy sector but might negatively impact clean energy companies. However, this policy could also indirectly favor crypto by reducing regulatory pressures and fostering a more favorable investment environment for energy-intensive Bitcoin mining operations.
Jefferies also pointed to…
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