Well election season is here again and everyone is wondering what potential outcomes may mean for markets, and especially Bitcoin. To get straight to the point, a Trump re-election will likely be positive for Bitcoin, and here’s why. During a series of political maneuvers, Trump has effectively nationalized the Fed, in policy terms. This was first observed in November of 2019 right here on Zero Hedge:
…the cumulative evidence increasingly points to an unholy alliance between Donald Trump and the US Federal Reserve with the Fed succumbing to political pressure and delivering Donald Trump what he needs most: A soaring stock market to ward off political problems and to help ensure a 2020 re-election.
What that means exactly, is that Trump has pressured the Fed to lower rates and create more US Dollar supply, known as “Quantitative Easing” in Fed language. This was an ongoing operation until COVID-19 came and then the charts just exploded. The Fed created tens of trillions in digital US Dollars in March & April of 2020.
Remember that Bitcoin cannot be created by a central power, so it is not an inflationary asset. Like Gold, investors flock to Bitcoin whenever there is a shift in new money creation.
According to CryptoPotato, crypto news and analysis outlet, a survey was done asking the following question:
*500 people have completed this survey. 20% of the survey's participants were Americans and 43% (from the 20%) voted for the first answer.
The results are clear. However, they don’t mention if the impact will be positive or negative, in the survey. In our opinion, assets will have a positive effect on Trump re-election as investors will see a continuation of the last 4 years: unprecedented job growth, soaring stock market, booming economy.
The results show that with all the hype about Gold and DeFi, the political elections still have much more weight in markets, especially in Bitcoin. That’s with good reason, because political ramifications can have a big impact on Crypto. DeFi’s votes in the survey are very surprising, because the term DeFi has exploded in popularity over the last few months, according to Google Trends:
Trump has brought in unprecedented deregulation that has made Crypto more attractive. The Office of the Comptroller of the Currency has announced that chartered banks can hold Crypto assets:
The OCC issued an interpretive letter in July confirming that bank custody services could include holding cryptographic keys and other crypto-related assets, in response to a query from an unnamed bank. This clarification applies to federally chartered banks. Currently, companies that receive Wyoming’s special-purpose depository institution charter and trust companies in some states can offer digital asset custody services. “The OCC is trying to get in front of cutting-edge issues by clarifying that national banks can offer services related to crypto where the states have already provided such clarification to state-chartered banks,” said Paul Clark, partner at Seward & Kissel LLP, which has offices in New York and Washington.
Banks have been slow to seize on this – but the point is in reference to an election, Trump means further deregulation and Biden means more regulation, higher taxes, and bigger government. Banks are planning to make a digital dollar in some form. The mechanics are up to debate, but the global ‘upgrade’ is going to happen whether we like it or not:
Sooner than you realize, paper money will be replaced by a “digital-USD”. Money is already digital. Your bank and brokerage accounts are book entries in a digital database. These book entries are claims that can be exchanged for paper money or paper stock certificates. Governments, including the US government, will be mandating the exchange of all paper money for its digital “upgrade.”
But overall, Crypto is not a partisan issue. The reason the survey is as it is, likely is due to perceived volatility. Social instability of any kind, can be a factor for the price of Bitcoin. Bitcoin in particular has become a safe haven for assets when things get dicey.
Bitcoin has been a wildcard asset in markets that has triggered great debates but reached no real conclusion. We still don’t know who the real creator is, although we see fingerprints of the US government, especially the NSA patent SHA-2 and other hash encryption algorithms used. Further adding to the mystery are large whale accounts that have remained dormant or otherwise inactive. Another sign that the US Government is involved is how USA in particular has embraced the technology, and is even leading a push to accept Crypto at traditional banks.
So based on this, it’s logical to see how a political election could affect Bitcoin. For example, many countries have outlawed the use of any Cryptocurrency. We’re not insinuating that can happen in the USA, however, like the FX markets - politics has a huge role to play in this dark market. The reason is because it’s unregulated. There is no central place, no authority, where you can buy Bitcoin or trade in Crypto. As explained in the book Splitting Bits - nothing with Crypto is as it seems.
But there is an interesting phenomenon that should also be mentioned here. Unlike FX markets, Crypto markets have sparked a global educational interest. There are thousands of vendors selling courses on Crypto, and even Coinbase has their own training on how to use and be wise with your new money (digital crypto). Why did that never happen for FX? In fact, the opposite happened. Big banks invest in anti-education programs or as one book has described it, the ‘dumbing down’ of America. The reason is clear; if the average person understood how badly they were losing from inflation and other factors, there would be a revolution. The powers to be don’t want smart, savvy investors. They want slaves just smart enough to operate the factory robots but dumb enough not to mind or understand how a small group of people continues to grow their wealth and increase their influence over our lives.
Perhaps Crypto is going to change all that. Sites like CryptoPotato.com are growing in popularity, even in countries outside their origin. The only reason information based sites grow in popularity is when there is an interest - it can’t be artificial. People have a genuine interest to learn about Cryptocurrency.
Another question: Will Trump issue in a new era of Crypto positive regulations (or lack thereof?) - this is something for speculation. But his track record in dismantling the power of the Federal government is strong. He has deregulated markets and the SEC under his watch has changed the rules of accredited investors:
The Securities and Exchange Commission today adopted amendments to the “accredited investor” definition, one of the principal tests for determining who is eligible to participate in our private capital markets. Historically, individual investors who do not meet specific income or net worth tests, regardless of their financial sophistication, have been denied the opportunity to invest in our multifaceted and vast private markets. The amendments update and improve the definition to more effectively identify institutional and individual investors that have the knowledge and expertise to participate in those markets.
One thing is for sure, the next 18 months are going to be good for traders, because volatility creates risk and opportunity.
