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Cryptocurrency News Articles
Bitcoin (BTC), Gold Could Benefit From Rising Geopolitical Tension and U.S. Election: JPMorgan
Oct 04, 2024 at 04:05 pm
Geopolitical risk and the upcoming U.S. election are likely to reinforce the 'debasement trade,' to the benefit of both bitcoin and gold, the report said.
Geopolitical risks and the upcoming U.S. presidential election are likely to benefit bitcoin and gold, according to JPMorgan.
The report said that a Trump win would likely boost both bitcoin and gold.
Markets aren't currently pricing in a victory for the former president.
Geopolitical tension and the upcoming U.S. presidential election will likely underpin the 'debasement trade,' and this favors both bitcoin (BTC) and gold, JPMorgan (JPM) said in a research report on Wednesday.
The report noted that both bitcoin and gold are likely to benefit from the geopolitical risks and the upcoming U.S. election, with the former being favored by a Trump win and the latter by a Biden victory.
"A Trump win in particular, apart from being supportive of bitcoin from a regulatory point of view, would likely reinforce the 'debasement trade' both via tariffs (geopolitical tensions) and via an expansionary fiscal policy ('debt debasement')," analysts led by Nikolaos Panigirtzoglou wrote in the report.
However, the report added that markets aren't pricing in a victory for Trump just yet. The chances of a Trump election win are currently priced in with a low probability looking at other asset classes other than gold and bitcoin, the report said, adding that this is because investors have been preoccupied with the recession trade in recent months.
If the "Trump trade" plays out in a similar way to 2016, there should be higher U.S. Treasury yields, a stronger dollar, U.S. stock market outperformance, in particular banks, and tighter credit spreads, JPMorgan said.
"This shift has not happened yet, with only a small move higher seen in these markets. For example, in the six month window around the 2016 American election, 5-year Treasury yields rose 1%, the DXY surged 8%, U.S. equities outperformed to the tune of 6%, banks beat the rest of the S&P 500 stock index by 15% and high grade corporate credit spreads tightened significantly," the report noted.
Bitcoin is not a safe haven against geopolitical risks, Standard Chartered said in a report.
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