As the 2024 U.S. Presidential election looms, bitcoin is flirting with a new all-time high. Why is BTC reaching such heights in a time of radical uncertainty? The cryptocurrency market is buzzing with excitement as bitcoin’s price danced around the $73,000 mark earlier this week.
This surge can be attributed to bitcoin’s specifically, and cryptocurrencies more generally, as an asset class uncorrelated with traditional assets. I believe crypto is drawing attention from investors seeking refuge from traditional market volatility. With the possibility of hitting a new all-time high of $80,000 in November, bitcoin continues to captivate the financial world.
The benefits of uncorrelated assets
In uncertain economic times, investors look for assets that don’t follow traditional markets in lockstep. Bitcoin has emerged as a beacon of hope for diversifying institutional investment portfolios and individuals’ savings.
Bitcoin’s recent surge highlights its potential both in terms of growth potential as well as an asset uncorrelated with more regularly-traded asset classes. Here’s how institutional investors are using crypto as a hedge:
Data from the Chicago Mercantile Exchange (CME) shows a huge uptick in November call options, with a breakeven price near $80,000. Call options are how traders wager on an underlying asset’s price rising without owning the underlying asset. Why don’t they just buy crypto directly? Honestly, I don’t know! Here’s what I do know:
- The standard leverage in a call option is 100:1 (for every $1 in the option contract, the trader controls $100 worth of the underlying asset)
- Leverage amplifies both gains and losses
- Options are generally considered to be too complex and risky for everyday folks
Overall, this massive bullish sentiment reinforces a theme we’ve discussed many times: The growing confidence in bitcoin’s resilience and potential for growth.
But the election! What about all the uncertainty surrounding the next U.S. president and their stance on crypto?
Trump’s symbiotic relationship with crypto
Should Donald Trump secure victory in the presidential election, his pro-crypto stance might further fuel the ascent of the entire crypto industry.
He has made clear his intentions to bolster the crypto industry, even promising to transform America into “the crypto capital of the planet.”
His plans include firing SEC Chair Gary Gensler and promoting regulatory frameworks favorable to digital assets!
Trump’s vocal support for cryptocurrencies could translate into policy changes that benefit the crypto market, potentially accelerating its growth trajectory. I mean, he’s behind World Liberty Financial! He’s the only candidate I know of that has an NFT series! His campaign has been accepting crypto donations since May at least. He floated the idea of a strategic bitcoin reserve.
Here’s his official stance on crypto. Overall, I believe the crypto market has nothing to fear from a Trump win.
Harris: Not bad for crypto, bad for the dollar
In contrast, Vice President Kamala Harris presents a more tempered approach to cryptocurrency. While not entirely adverse to digital assets, her presidency could pose challenges for crypto enthusiasts. There’s no official position like the link I shared for the Trump campaign, there are some things we can say with confidence:
“…her administration would be more supportive of the crypto industry than President Joe Biden’s, whose regulators have taken a hard line with digital asset firms for pushing the limits of traditional financial safeguards.”
Well, that’s something. More from Jasper Goodman for Politico:
“Harris, for now, is walking a fine line that has yet to trigger a public outcry from her party’s crypto lovers or haters. She’s vowing to ‘encourage’ technologies like digital assets while protecting consumers and investors, and her campaign is conducting outreach to the industry.”
Some analysts suggest that a Harris victory might lead to a short-term dip in bitcoin prices. In my mind, that’s not the major issue.
The Harris administration promises a great deal of spending – like Biden’s multi-trillion-dollar deficits, for another four years. Furthermore, the non-partisan Tax Foundation projects the Harris fiscal plan would reduce GDP by 2%, reduce wages by 1.2% and cost the economy nearly 800,000 full-time jobs. High deficits plus that level of GDP reduction are a recipe for stagflation.
In other words, I think a Harris presidency would boost the anti-inflationary characteristics of bitcoin specifically (and crypto generally), along with gold and other inflatable commodities. Most of us are taking on a whole lot more currency risk than we realize – considering that we’re paid in dollars, transact in dollars and often have our entire savings in dollars.
For crypto owners, we see a win/win scenario
For those who already own cryptocurrency, this election presents a win/win.
Regardless of who wins the presidency, bitcoin’s momentum suggests continued growth potential. Trump’s policies might expedite gains, regulatory clarity and crypto acceptance.
A Harris presidency seems indifferent at worst to crypto – but the inflationary impact on the dollar could drive demand for bitcoin as an inflation hedge.
That means everyone who owns digital assets can take comfort. We’ve seen massive growth in the past – why wouldn’t we expect more in the future?
If you haven’t yet diversified with crypto, the question is: What are you waiting for?
The current political and economic landscape provides a compelling case for diversifying with digital assets. With institutional interest on the rise and market conditions ripe for growth, now is a great time to explore cryptocurrency diversification.
Whether you seek to hedge against your other assets, or capitalize on potential gains, embracing crypto could be a strategic move for securing your financial future. And it’s easier than ever! You can open a Digital IRA in less than 10 minutes right now – or anytime, day or night.
As America heads to the polls, bitcoin’s trajectory suggests that whoever wins the presidency, crypto stands poised to emerge victorious.
Do you want to share in the victory? Or are you content to sit on the sidelines as a spectator?
