Bitcoin’s label as a Trump trade is starting to feel pressure due to broader market changes, which are fueled by Donald Trump returning to the White House.
Bond yields and the US Dollar have recently risen as the Republican candidate has been leading vice president Kamala Harris on prediction markets.
Bloomberg reported that investors were adjusting bets and pulling back expectations for a looser monetary policies, because Trump’s growth agenda would fuel a strong US economy, if Trump wins the election on November 5.
Bitcoins and stock prices have fluctuated due to this market change, as financial conditions tighten.
Bitcoin has experienced its first weekly drop in the last three weeks. Trump, who has in the past embraced digital assets, is still unsure if his economic policy will have a negative impact on the cryptocurrency.
In the report, Tony Sycamore said, “Absolutely yes, the sale of stocks, the higher US dollar and the higher yields, all add up to a tightening financial condition.”
He said that tightening at a rapid rate is putting pressure on assets with high risk, like cryptocurrency.
Bitcoin performance remains unreliable under Trump
Bitcoin rose 1% on Thursday to $67,300. However, its weekly drop is still around 2%.
Bitcoin is still up 60% on the year despite recent drops. In March, it reached a new high of $73,798.
The demand for US bitcoin spot exchange-traded fund (ETFs), which has driven the asset rally in the past, is now uncertain as the financial environment tightens.
Trump has promised to turn the US into the “Crypto Capital of the Planet” in order to appeal to crypto enthusiasts, as opposed to Biden, who is a proponent of regulation.
The Democratic candidate Harris is taking a cautious approach and advocating a regulatory structure for the industry.
The contrasting views of the candidates show the different impacts that each could have on industry.
Bitcoin future influenced by the election results?
According to a Bloomberg News/Morning Consult survey, the race between Trump (R) and Harris (H) is statistically even in swing states.
Due to the tight margins, final campaign efforts may play an important role in choosing the winner.
Bond yields could rise even more if Trump is elected, which would negatively affect risky assets such as Bitcoin.
Caroline Mauron is the co-founder and CEO of Orbit Markets. She noted that “the expected regulatory softening by a Trump Administration towards the crypto industry, should still be more important,” despite possible market tightening.
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