Home Crypto News Is the Controversy over the US Presidential Election Good or Bad for BTC?

Is the Controversy over the US Presidential Election Good or Bad for BTC?

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What every week it has been.

While events on each side of the aisle have been assured that the US Presidential election could be a landslide in both route, this week noticed the election remodel into an actual nail-biter: whereas Joe Biden was forward at press time, Donald Trump nonetheless had a path to victory.

At the identical time, the Trump marketing campaign has already made it clear that the present President won’t settle for a loss with no battle.

The Trump marketing campaign has already demanded a recount in the state of Wisconsin, which Joe Biden gained by lower than a share level; the marketing campaign additional stated that it could file swimsuit in Michigan to halt vote counting there.

Is the 2020 Election a ‘Constitutional Crisis’ in the Making?

The state of Pennsylvania has additionally been focused by the Trump marketing campaign with a lawsuit to cease ballot-counting filed Wednesday. Additionally, Before any official outcomes have been introduced, the president’s marketing campaign additionally intervened at the Supreme Court in a case that challenged Pennsylvania’s plan to rely ballots obtained till as much as three days after Election Day.

Also on Wednesday night, the New York Times reported: “Mr. Trump’s team added Georgia to its list of legal targets” with requests for a court docket order that may implement strict deadlines in Chatham County. The request follows allegations by a Republican ballot observer {that a} small variety of ineligible ballots may be counted in a single location.

As the election drama continues, the variety of lawsuits and different makes an attempt to halt vote counting is prone to develop. In different phrases, we’re in for a wild trip.

Indeed, Kadan Stadelmann, Chief Technology Officer of Komodo, instructed Finance Magnates that “on condition that there’s nonetheless a handful of states which are undecided in the presidential race, tensions are actually excessive.

Kadan Stadelmann, Chief Technology Officer of Komodo.

“The steady counting of mail-in ballots and doable lawsuits in key swing states might stretch to days or weeks, making for a constitutional disaster. Subsequently, there’s a great likelihood that neither get together will settle for the end result if they aren’t in favor of the outcomes.”

What does this imply for crypto?

“Political Uncertainty and Economic Uncertainty Go Hand in Hand.”

Kadan Stadelmann stated that typically talking, “political uncertainty and economic uncertainty go hand in hand.”

This time round, although, “it’s difficult to determine with certainty that there will be a negative effect on financial markets,” Stadelmann stated. “Historically, S&P 500 volatility has been higher following an election as markets frequently reprice the probability of the future administration’s policies.”

 

So far this week, the election drama doesn’t appear to have affected inventory costs negatively, in reality, the reverse appears to be the case. Quite a few analysts have stated that the upward motion in inventory costs is due largely to an obvious enhance in the probability that Joe Biden will obtain the 270 electoral votes wanted to change into the President-elect.

Additionally, there have been upward actions in cryptocurrency markets. Over the course of the final week, the value of Bitcoin has steadily moved up from round $13,200 to $14,341. Over the identical time interval, the collective market cap of all cryptocurrencies has elevated from $394 billion to $410 billion.

“At This Point, You Could Elect a Martian President and Risk Assets Would Rally.”

However, it’s unclear whether or not Bitcoin and different cryptocurrencies are being fueled by Biden’s present lead in the presidential race, or if the risk of a deeply contested election (and doable civil unrest to observe) may very well be what’s propelling Bitcoin ahead.

Jeff Dorman, Chief Investment Officer at Arca, believes that BTC’s upward journey is more than likely because of the former.

Jeff Dorman, chief funding officer at Arca.

“Markets hate uncertainty,” he stated, notably in relation to threat belongings. “Therefore, anything that clears up uncertainty is viewed positively by markets. Most investors can deal with negative outcomes, but they struggle to deal with uncertain outcomes.”

Therefore, “now that the election is (mostly) over and (seems) to be a victory for Biden, that uncertainty cloud is removed and people put money back to work.”

Arca revealed a report about this very phenomenon final month: “it appears that any news that clears up uncertainty will be met positively by market participants,” the report reads. “At this point, you could elect a Martian president and risk assets would rally simply because the uncertainty discount would be removed.”

“More Stimulus Is Coming Regardless of Who Is Elected.”

Therefore, the value of Bitcoin and different cryptocurrencies might have really been held again in current weeks and months due to the seeming uncertainty of the election. Now that issues appear to be a bit extra clear, BTC might proceed to rise out of the veil of uncertainty and into new heights.

“Once uncertainty is removed, reality sets in that more stimulus is coming regardless of who is elected, and that brings USD weakness,” Jeff Dorman instructed Finance Magnates. “This is bullish for BTC.”

Indeed, Meltem Demirors, Chief Strategy Officer at CoinShares, instructed Finance Magnates that “partisan narratives aside, whether they are delivered in the form of tax cuts for corporations and the wealthy (Republicans) or in the form of government spending programs (Democrats), deficits are inevitable regardless of the outcome.”

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In different phrases, “more stimulus is inevitable. Under any party, the spending and money printing orgy must continue. The realities facing investors are only different in the margins and the details. Rates remain at zero for the foreseeable future. Inflation continues not in CPI but in asset prices.”

Meltem Demirors, chief technique officer of CoinShares.

Therefore, “Bitcoin has responded and will continue to respond not to the election, but to two continued quarters of economic and GDP contraction and rapid financialization as seen in dramatic increases in asset prices, especially in equities and housing stock.”

What Would a Trump or Biden Victory Mean for Crypto in a Practical Sense?

Beyond uncertainty, what would the election of both candidate imply for crypto in a sensible sense?

Daniel Dabek, the Founder of SafeX, instructed Finance Magnates {that a} Biden victory may very well be optimistic for the mining sector of the crypto trade: “Joe Biden has been vocal about tariff removal between USA and China, which is essential for the miners operating in the United States.”

“This would lead to a competitive advantage to miners once again I believe increasing the uptake and marketing of cryptos,” Dabek stated. “Not to mention, Biden was the Vice President during Bitcoin’s inception when it did rally from $0.01 to $1,200.00.”

The Trump presidency additionally noticed a serious Bitcoin rally: Blockchain.com’s Garrick Hilleman wrote that “during the Trump presidency, crypto has performed extraordinarily well: when Trump was first elected in 2016, bitcoin’s price was ~$700. Today it stands at over $14,000, a 20x increase.”

Daniel Dabek, founding father of SafeX.

Daniel Dabek added that as Bitcoin was propelling upward throughout the Trump years, “the whole crypto market grew from an aggregate market cap of $13 B peaking at $900 Billion.”

“So, there is precedent to Trump leadership and fabulous growth in the altcoins and cryptocurrency markets,” Dabek stated.

In Either Scenario, the USA’s Policy Gridlock Is Likely to Continue

Meltem Demirors identified that “the presidential election doesn’t really matter so much from a policy perspective, since the GOP retained its hold on the Senate, the Dems maintained control of the House, and the gridlock will continue.”

Garrick Hileman, the Head of Research at Blockchain..com, additionally identified the continuation of the policy-making gridlock that has plagued the United States for years: “a Biden win and Republicans continuing to hold the Senate, as appears likely, means the government will remain divided,” he stated.

At the identical time, although, “crypto has performed well during the current environment of divided government and I would expect crypto to continue performing well under this scenario.”

How Much of an Impact Will the Election Actually Have on Bitcoin?

And certainly, coverage gridlocks and partisan political narratives apart, there are nonetheless forces in the world which are greater than the American authorities: for instance, as these phrases are being written, the COVID-19 pandemic continues to be raging round a lot of the world.

In different phrases, the way forward for Bitcoin and different cryptocurrencies won’t be wholly decided by who takes workplace subsequent.

Therefore, Bitcoin’s subsequent strikes will largely be decided by the course it has already been set on.

For instance, BTC has actually moved in tandem with inventory markets throughout varied durations of its historical past, Bitcoin has additionally been more and more described as a ‘safe-haven’ asset that grows in power and utilization when fiat currencies fail.

Indeed, Komodo’s Kadan Stadelmann stated that “we’re seeing this election affect the cryptocurrency markets in a positive way.”

“If anything, the younger generations are beginning to take notice of the fact that Bitcoin has decoupled from the traditional markets,” he added.

“In addition to younger generations, even large corporations are jumping on the Bitcoin train. History has shown us that when uncertainty arises around these traditional economic and monetary systems, and they become harder to trust, investors and other big institutional players view crypto as a safe haven. We’ve recently seen large institutional investors like Grayscale begin to make this shift towards crypto.”

“The World Has Tons of Cash, but the Investment Opportunity Set Is Slimming by the Day.”

Arca CIO, Jeff Dorman additionally identified that past Bitcoin, “the rest of the digital assets space is more akin to small cap technology companies, and even though FB, GOOG, AAPL and other large tech stocks are rallying today, the election doesn’t really move the needle much for small companies or emerging technologies,” he added. “So, [for altcoins, the rally] has little to no impact.”

Still, Dorman believes that “ultimately, the world has tons of cash, but the investment opportunity set is slimming by the day.”

“Government bonds are worthless. Equities are expensive. Commercial real estate is being threatened by COVID. So when you want to put cash to work, but the investment opportunity set is shrinking, you have to look elsewhere. And digital assets is one of a few areas of emerging technology growth that is not well understood or overly invested.”

“This is great for asset growth, which in turn, will lead to more investments in projects, which will lead to greater returns.”

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