Main Points :
- Citi’s report suggests that a Republican victory in both chambers of Congress would be the most favorable outcome for crypto markets and Coinbase.
- If Harris wins the presidential election and Congress is split, uncertainty would increase for the crypto sector.
- Citi maintains a buy recommendation on Coinbase but lowers its target price from $345 to $275.
Republican Victory Could Boost Crypto Markets
In the lead-up to the U.S. elections, financial institutions like Citi are analyzing how political outcomes might impact different sectors, especially the volatile crypto market. According to a report by Citi, a strong Republican showing in both the Senate and the House of Representatives would be the most favorable scenario for cryptocurrency markets and for Coinbase, one of the largest crypto exchanges in the U.S. This outlook stems from Republican leaders, including figures like Donald Trump and J.D. Vance, who have openly supported digital asset reforms. Such political support could accelerate the pace of regulatory changes and create a more crypto-friendly environment, increasing investor confidence.
Potential Challenges Under a Split Government
However, the situation could become more uncertain if Kamala Harris wins the presidency and Congress is divided between Democrats and Republicans. Citi’s report highlights that such a split government would introduce greater uncertainty into the crypto space. In this scenario, legislative progress on digital assets could slow down, and key appointments to government agencies that oversee the crypto sector could face delays. Harris has not yet outlined a detailed position on cryptocurrency policy, which adds to the unpredictability of how her administration might approach the sector.
Legislative Impact on Crypto Reforms
A Republican-led Congress could provide the momentum needed to pass critical bills like the Financial Innovation and Technology for the 21st Century Act (FIT21), which aims to reform digital asset regulations. The unified support from both the Senate and the House would also enable the approval of crypto-friendly agency leaders, speeding up reforms. Citi’s analysts believe that this political alignment would create a positive environment for crypto adoption and growth, particularly for companies like Coinbase that stand to benefit from regulatory clarity.
Uncertain Outcomes with Harris and a Split Congress
On the other hand, if Harris wins the presidential election and Congress remains divided, Citi warns that this would be the most uncertain outcome for the crypto market. With Democrats holding the Senate and Republicans controlling the House, legislative gridlock could impede the passage of crucial crypto bills. Additionally, the report points out that several Democratic members of the current Financial Services Subcommittee are strongly opposed to cryptocurrencies. While they are outnumbered by crypto-friendly members across both parties, their opposition could still pose challenges to legislative progress.
Lowered Target Price but Optimism for Coinbase
Despite the uncertainties surrounding the election, Citi maintains a positive outlook for Coinbase. Although the target price for Coinbase’s stock has been adjusted down from $345 to $275 due to market conditions, the buy recommendation remains. On October 18, following the release of the report, Coinbase’s stock saw a 2.7% rise, closing at $209.65. Citi’s analysts remain confident in the company’s long-term prospects, especially if the U.S. political landscape becomes more favorable to digital asset reforms.
A Pivotal Moment for Crypto Markets
The upcoming U.S. elections could be a turning point for the cryptocurrency market. While a Republican victory is seen as the most bullish outcome, especially for companies like Coinbase, a split government could bring about prolonged uncertainty. Investors in the crypto space will be watching the election results closely, as the political landscape could significantly impact regulatory reforms and market conditions for digital assets.
