Crypto stocks fall as bets on Kamala Harris win rise after debate

US cryptocurrency stocks declined in early trading on Wednesday after Democratic candidate Kamala Harris challenged her Republican rival, Donald Trump, in a heated presidential debate.

Trump, a known supporter of cryptocurrency and proponent of a more favorable regulatory environment, had presented himself as a champion for the industry. This position contrasted with the current administration, which has faced criticism from crypto advocates for perceived regulatory overreach.

Following the debate, betting odds on PredictIt showed an increase in Harris's chances of winning, rising to 56% from 53%, while Trump’s odds fell to 48% from 52%.

Adding to the shift in sentiment, pop superstar Taylor Swift announced her support for Harris on Instagram, reaching her 280 million followers.

“Given Harris’s performance in the debate and Taylor Swift’s endorsement, the probability of a crypto-friendly Trump presidency appears to have diminished slightly,” said Susannah Streeter, head of money and markets at Hargreaves Lansdown.

Bitcoin, the largest cryptocurrency, reduced its losses to 2%, while ether fell by 2.6%.

In July, Trump had sought support from the crypto community at a conference, promising more favorable regulation if re-elected and advising, “Never sell your bitcoin,” suggesting that his administration would hold bitcoin as a store of value.

Harris has not yet outlined her stance on cryptocurrency.

Before the debate, many market participants and analysts were closely watching bitcoin as an indicator of which candidate might gain an advantage.

“The debate did not address cryptocurrency directly, but market sentiment is shifting towards Kamala Harris,” said Valentin Fournier, analyst at research firm BRN. “This shift leads to a less optimistic outlook for bitcoin compared to the more favorable projections made by Trump at the Bitcoin 2024 Conference.”

The cryptocurrency market, often seen as volatile and risky, has faced scrutiny from the U.S. Securities and Exchange Commission for alleged violations of securities laws. However, its mainstream acceptance has grown, supported by Wall Street institutions, corporate figures like Elon Musk, and the approval of U.S. exchange-traded crypto funds.

In pre-market trading, shares of crypto miners Riot Platforms, Marathon Digital, and U.S.-listed Hut 8 fell between 3.6% and 5.3%. Software firm MicroStrategy, which holds significant bitcoin assets, saw a 5.4% drop, while crypto exchange Coinbase Global and blockchain farm operator Bitfarms declined by 3.6% and 3.8%, respectively.