The Bitcoin exchange rate skyrocketed in the run-up to the US elections and increased massively by 30 percent in October.
For a short time, digital gold even reached highs that investors have not seen since early 2018. What consequences does the outcome of the US elections have for Bitcoin?
This week, a geopolitical event is on the agenda that traditionally causes turmoil in the markets and also in Bitcoin.
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At the end of October, the American stock indices recorded the worst trading week since the corona crash began in March. In return, Bitcoin showed decoupling tendencies from the stock exchange floor and at the same time heralded a crisp rally. In the last two weeks, digital gold has risen in value by around 2,000 US dollars and thus by 17 percent. The result was a bullish overall mood among Bitcoin investors, which was last felt in 2017.
How does the election outcome affect Bitcoin?
In the US presidential election, many believe in the victory of the Democratic challenger Joe Biden. In addition, some analysts suspect that no matter who becomes the new US president, safe havens such as gold or Bitcoin will be among the winners.
So whether the U.S. government is led by Joe Biden or Donald Trump, Bitcoin would benefit. Grayscale CEO Barry Silbert believes that both Trump and Biden will provide BTC momentum.
In his opinion, both politicians will continue the expansive monetary policy of recent years. In view of a second corona wave in the US and the associated rescue packages for the economy, a continuation of this policy seems likely.
M2 Money StockBoard of Governors of the Federal Reserve System (US)
The situation for the markets in Europe also looks bleak in view of the recurring corona lockdowns. In response, the European Central Bank has already announced that it will print even more money to support the economy.
Is Joe Biden better for Bitcoin?
Jeff Dorman, Chief Invesment Officer (CIO) at the crypto hedge fund Arca also believes that in the end it doesn’t matter who wins the U.S. elections.
Bitcoin and other risky investments are not dependent on who wins the U.S. elections because they will dismiss the uncertainty of the market regardless of the outcome. The markets just want to know that there is a winner.
He also said that a majority of investors are afraid of a close election. But this is unjustified, he said, because assets such as gold, silver and Bitcoin would benefit from it in the long term.
Nevertheless, he believes that a victory for Democrat Joe Biden would be better for Bitcoin overall.
I would say that the Democrats are better for Gold and Bitcoin, but as long as there is a clear winner, everything goes up.
In contrast, the Bank of America expects a stock crash when the election results are tight.
The markets want to see a clear win for Trump or Biden within a week. If there is a close election result, stocks could fall by up to 20 percent.
This crash could also be dangerous for Bitcoin in the short term, as the markets would be massively unsettled. Similar to the Corona crash at the beginning of March, a widespread sell-off of assets could also pull Bitcoin down for a short time.