Bitcoin and the 2020 US Presidential Election
Breaking down how the 2020 US Presidential election could impact bitcoin, its price, and the future of crypto.
Bitcoin has rallied since the start of a global pandemic that caused the price to plunge in mid-March.
The entire world continues to deal with the aftermath of COVID-19, fear of an ongoing recession, unemployment, overall FUD, and more. The pandemic has also created clear winners and losers within US markets.
It continues to impact store of value assets like bitcoin and gold. People are seeking out safe havens from the US dollar as ongoing quantitative easing and a general fear of inflation persists.
Now, let’s throw a United States Presidential election right on top of the heap. Tuesday, November 3 is rapidly approaching. What’s going to happen to bitcoin and crypto when the US either elects a new president or re-elects President Donald Trump?
Trump or Biden — The Bears Are Circling the US Dollar
One thing is clear, whether or not the next US president is Trump or Biden, pundits and predictors see more quantitative easing coming, the greater potential for inflation, and a willingness to use the FED and US Treasury as needed. That means that analysts are bearish on the US dollar.
General uncertainty and a weakening of the US dollar will continue to drive people to safe haven assets like gold and bitcoin. Prices in these assets could spike in the months following the 2020 US presidential election.
We could see a spike in price for both gold and bitcoin following the election. It will not necessarily be due to the winner though... Many think it’s inevitable, regardless of the outcome of the election.
Volatility Could Keep Bitcoin Prices Lower in the Short Term
All signs point toward a breakout for bitcoin, but why hasn’t it happened yet? With fears of inflation and investors seeking out assets like bitcoin and gold, one would think that the price should be spiking already.
There is also increased retail interest again on top of several big names like Paul Tudor Jones, Jack Dorsey, Jim Cramer, the Winklevii, and more calling for investors to add bitcoin to their portfolio.
We’ve even seen a major publicly-traded company in MicroStrategy taking a strong stance in favor of bitcoin. There are loads of bullish indicators for bitcoin in 2020.
Increased interest in bitcoin should indicate an impending surge in price. BUT, overall market volatility remains the dominating factor, suppressing any major breakout.
Overall market volatility, however, remains supreme.
Volatility has proven to be enough to keep bitcoin and other safe-haven asset prices at bay, despite some smaller surges here and there. This could continue in the short term following the election.
It’s also likely that markets are already accounting for a Biden presidency. And if Trump does manage re-election, we more or less know what to expect when it comes to a federal government stance on crypto (i.e. there’s been some rhetoric but not a lot and also not a lot of action).
Bitcoin Will Persist No Matter the Result
Bitcoin, like the global financial markets, is capable of being influenced by breaking news, major events, and the lot. Regardless of these influences, it will continue on its course of action.
We’ve seen some correlation between the US stock markets and bitcoin’s price in 2020, but we’ve also historically seen instances where it entirely decouples from what traditional markets are doing. It will do what it wants, when it wants, with or without permission.
It’s key to remember that bitcoin operates without concern for who’s president of any country.
The actual protocol and technology behind the world’s largest cryptocurrency need no blessing from a federal government to exist and function.
In fact, bitcoin often tends to jump in price when it’s attacked.
President Trump has stated that he’s not a fan of bitcoin but he’s given us very little insight beyond a few throwaway statements.
Some have read into his feelings on crypto-based on who he’s surrounded himself with but all of it is pure speculation. There isn’t anything significant to go off of right now.
When it comes to deciphering how either President Trump or potential President Biden feel about bitcoin, the jury is out.
That’s fine for bitcoin because, again, bitcoin is already mainstreaming without any comprehensive relationship with the US federal government.
Historically Prices Have Jumped Following Elections
If we look at history, bitcoin has jumped in price following the US presidential elections. This is not indicative of how it will perform this year though.
The market volatility factor could prove to be too much for a surge beyond any that we’ve already seen in 2020. That said, don’t count it out.
Going back to an earlier point, prices could remain within a tight range in the short term following the elections. Looking out further though, early 2021 will prove to be critical for bitcoin. Election aside, quantitative easing could bolster the price in the long term.
Bitcoin is still young. There isn’t any time period to properly compare 2020 to in terms of price action.
The historical lens of how bitcoin’s performed following the US presidential elections is also not the best benchmark.
Since bitcoin’s inception, it’s gone up on the whole — drastically. We don’t have the largest pool of data to compare this year’s election to. 2016 would be the most comparable year and even then, the crypto industry was nowhere near what it is today.
Conclusions — Key Takeaways
Following the US presidential election, most analysts are predicting a continuation of price action that we’ve already seen this year.
If we had to put a label on it, we’d probably call it cautiously bullish. This is especially true if we look more long term.
The months following the election could be critical but not necessarily because of the result of the election.
Bitcoin has momentum — election or not. The crypto industry will continue to make progress with mainstream investors, consumers, and regulatory agencies regardless of who the next US president is. Progress could mean just a steady or even volatile climb in the short term, but an overall continued rise in the long term.
There is momentum in bitcoin’s corner for the price to rise further. More mainstream adoption is enough for that.
It’s also established that the industry is moving forward regardless of who the president is or what they have or don’t have to say about bitcoin. All things considered, this is probably good for the bitcoin bulls.
Something to watch is how the traditional financial markets react to the election. Many analysts also see this price action already starting to be baked in. Greater volatility in the days leading up to and following the election, however, could lead to an influx in cash to bitcoin.
Even if the rush toward safe-haven assets doesn’t prompt an immediate price surge, it’s bullish long term for bitcoin and the crypto sector as a whole.
Thanks for reading! I am not an investment or financial advisor. This is not financial advice. All opinions expressed are mine alone. If you want more content like this, sign up for my weekly email.
