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 Trump’s plans to reduce involvement in global conflicts, such as the Russia-Ukraine war, which could lower geopolitical risks and contribute to market stability. This move is expected to benefit sectors that have a negative correlation with traditional commodity prices, further boosting the appeal of cryptocurrencies as a stable investment alternative.

Stocks to benefit

Jefferies identified several crypto-related equities that could significantly benefit from these policies, including Coinbase and MicroStrategy, due to their direct involvement with Bitcoin and crypto, as well as almost every major public Bitcoin miner, including Marathon Digital, Riot Platforms, and Cipher Mining, among others.

The list also includes CME Group, Square and Paypal, which recently launched its own stablecoin and has significantly increased its footprint in the crypto industry in recent years.

According to the report, these companies are poised to benefit from an environment in which the US dollar’s appeal diminishes and digital currencies gain traction as a store of value.

Jefferies stressed the importance for investors to stay informed and adapt their strategies to these potential policy changes. The anticipated support for crypto under a Trump administration could present significant opportunities for growth in the crypto sector.