Political Currents Influence Crypto Market Dynamics

The recent Bitcoin Nashville conference, marked by the attendance of various political figures, including both Republicans and Democrats, as well as former President Donald Trump, underscored a palpable political undertone within the crypto event. Investment bank Jefferies highlighted this in a Monday research report.

Jefferies analysts Jonathan Petersen and Joe Dickstein noted that Trump’s overtures to the crypto industry, particularly his promises to appoint crypto-friendly regulators, could tether the near-term price trajectory of Bitcoin (BTC) to the outcome of the U.S. presidential election.

Strategic Promises and Regulatory Shifts

During his Nashville address, Trump vowed to establish a strategic Bitcoin reserve, ensuring that the government’s seized BTC would remain unsold. This promise is part of a broader commitment to foster a regulatory environment favorable to cryptocurrency.

Jefferies observed that Trump’s recent pivot towards a more crypto-friendly stance includes pledges to create a presidential advisory council for the crypto industry and transform the U.S. into the “crypto capital of the planet.” Although this policy shift is relatively recent, it holds the potential to influence Bitcoin’s price, contingent on the November election results.

Read more: Trump Advocates for U.S. Bitcoin Sovereignty: Warns of Crypto Calamity Under Democratic Victory

Market and Mining Implications

Since the Bitcoin halving event in April, Bitcoin has appreciated approximately 5%, while the network’s hashrate experienced an 8% decline in May and June. Jefferies’ report indicates that the profitability of Bitcoin mining is slightly better than anticipated earlier in the year, with mining revenue per exahash falling by 40%-45% rather than the expected 50%.

The report also highlights the ongoing growth phase among major Bitcoin miners, who have placed substantial orders to expand their installed hashrate. Hashrate serves as a proxy for competition and mining difficulty within the industry.

Consolidation and Future Prospects

Jefferies identified a consolidation phase within the Bitcoin mining sector, citing recent mergers and acquisitions. CleanSpark (CLSK) recently agreed to acquire GRIID (GRDI), while Riot Platforms (RIOT) made a public offer for Bitfarm (BITF), which was subsequently rejected.

Management teams from mining firms suggest that further mergers and acquisitions are likely, emphasizing that access to power is more valuable than the mining fleets themselves.