Bitrabo Editorial
As the US presidential election draws near, there is a growing belief among crypto traders and analysts that a win for Donald Trump in November could lead to a significant surge in the Bitcoin price, as reported by the Financial Times.
Despite expectations of a post-Halving rally, Bitcoin has faced challenges in gaining momentum since April, including factors such as asset sales by US and German authorities and the looming $9 billion worth of Bitcoin and Bitcoin Cash (BCH) sales from the now-collapsed Japanese exchange Mt Gox.
Amidst these hurdles, discussions are taking place within the market about a potential “Trump trade” that might propel Bitcoin’s price upwards in the second half of the year.
Influence of Trump’s Victory on Price Rebound
Following the Halving event in April, which saw the daily supply of Bitcoin to miners cut in half, the price of Bitcoin has dropped by over 20% in the past month alone.
Various factors have contributed to this downward trend, such as selling pressure from authorities holding over $15 billion in BTC, and hedge funds dampening volatility through BTC basis trade. Market participants have been on the lookout for a catalyst to drive the next bullish movement in Bitcoin prices.
The Financial Times states that there is growing market optimism surrounding a potential Trump victory in the upcoming US elections. Traders and analysts view Trump as a more crypto-friendly candidate due to his positive interactions with the industry and acceptance of crypto contributions.
Industry insiders are hopeful that a Trump administration, coupled with strong Republican representation in Congress, could lead to more favorable and transparent crypto regulations.
Analysts like Manuel Villegas from Julius Baer anticipate that Trump’s energy policy proposals could benefit crypto mining companies by possibly facilitating the use of alternative energy sources for Bitcoin mining.
On the contrary, concerns have been raised about Biden’s previous tax proposals targeting crypto miners, including a proposed 30% tax.
Impact of New Policies on Bitcoin’s Price
The potential consequences of Trump’s policies on financial markets have also attracted attention. If Trump’s policies result in a higher US deficit, increased tariffs on foreign goods, and tax cuts, it could lead to higher inflation and US Treasury yields.
This scenario, known as “fiscal dominance,” could influence the price of Bitcoin, which has shown a correlation with key US Treasury benchmarks. A steeper curve and higher break-even rates could drive Bitcoin’s price up as it serves as a hedge against diminishing confidence in the US Treasury market.
However, the likelihood of a “Trump trade” and its impact on Bitcoin’s momentum hinges largely on Trump’s election opponent. Presently, RealClearPolitics Betting Average puts Trump’s odds at 55% and Biden’s at 16.5%.
If Biden remains a contender, Bitcoin bulls could be encouraged. Yet, if a viable new candidate emerges to challenge Trump, the report suggests that Bitcoin price performance might remain subdued.
Nevertheless, perceptions and narratives are vital in influencing the crypto market, and a collective belief in a Trump victory could have a positive effect on the Bitcoin price.
At the time of this reporting, Bitcoin has recovered to the $56,560 level following a sharp decline to $53,500 during early Friday trading hours.
Featured image from DALL-E, Chart from TradingView.com