As the global markets shift in response to the possibility of former President Donald Trump’s return to the White House, the classification of Bitcoin as a “Trump trade” is causing some turbulence. Bond yields and the dollar have seen an uptick recently, attributed to Trump’s lead over Vice President Kamala Harris in prediction markets. Investors are adjusting their expectations for monetary policy, anticipating a pro-growth agenda if Trump were to win the election on Nov. 5.
This shift in financial conditions has also had an impact on Bitcoin and stocks, with the cryptocurrency facing its first weekly loss in three weeks. While Trump’s support for the digital-asset industry has boosted sentiment, concerns arise about how his broader priorities may influence such optimism.
According to Tony Sycamore, a market analyst at IG Australia Pty, the current selloff in stocks, rising US dollar, and increased yields all point to a tightening in financial conditions, which could negatively affect crypto assets. Bitcoin, currently trading around $67,127, has experienced a 2% decline for the week after reaching a record high in March, propelled by demand for US spot-Bitcoin exchange-traded funds.
In the upcoming election, Trump has positioned himself as a champion of the crypto industry, while Harris has taken a more measured approach, focusing on implementing a regulatory framework. The outcome of the election could have significant implications for the industry, with Trump’s victory potentially leading to higher yields and a negative impact on risk assets, according to Caroline Mauron, co-founder of Orbit Markets.
As the race between Trump and Harris remains tight in key swing states, the final outcome could hinge on a final blitz of campaigning efforts. Despite the uncertainty, the expected regulatory support from a Trump administration for the crypto industry could outweigh any potential negative effects on the market.
At Extreme Investor Network, we understand the importance of staying informed about the latest developments in the financial markets, including how political events can impact various asset classes. Stay tuned for more expert insights and analysis on all things finance.