With the U.S. election drawing nearer, how could its outcome affect the price of Bitcoin?
The U.S. presidential election is drawing nearer — and on Nov. 3, Americans will go to the polls to decide whether they want to re-elect Donald Trump, or elevate Joe Biden to the White House.
It's a race that is difficult to predict. In mid-October 2016, The New York Times was forecasting with 91% certainty that Hillary Clinton would defeat Trump. Needless to say, they were wrong. Although many polls are pointing to a Biden win this time (and blockchain-based prediction markets are saying the same,) success for the Democrats is not guaranteed.
What Happened to the Price of Bitcoin in 2012 and 2016?
President Donald Trump's arrival in 2016 was much more interesting. When the result was first confirmed, Bitcoin shot up by 3.8% — from $709 to $736. Back then, the short-term surge was linked to the fact that Trump's victory took the stock market by surprise — and created uncertainty and volatility internationally. This resulted in demand for safe haven assets, and Bitcoin is regarded as one of them.
How Will the U.S. Election in 2020 Affect Bitcoin?
It's highly possible that Bitcoin could remain fairly muted throughout the election if the result is clear. But here's a disclaimer: the outcome is shaping to be anything but.
Donald Trump has also suggested that he may challenge the result of the upcoming U.S. election if he believes it is rigged. This would also spook the stock market, and again would work in the favor of cryptocurrencies and precious metals.
As you can see, the overarching theme here is certainty. Digital assets are unlikely to move much if there's a clear result and a peaceful transition of power — but expect turbulence if things start to get messy in Washington.
It is important to stress that not everyone agrees with this idea. Recent Bitcoin news has cast doubt on whether the cryptocurrency is the safe haven asset that everyone says it is — and some analysts argue that BTC is more closely correlated to the stock market than we think. In this scenario, we could see Bitcoin move in step with equities as they digest the news. Although Wall Street thinks a Trump win is unlikely, a second term for the Republicans is regarded as the preferable option in financial terms because of how Trump favors tax cuts.