What Will Happen To Bitcoin Following US Elections?

hodler November 7, 2020November 7, 2020

Bitcoin does not care. That is the main answer anyone should give you if you ask them what will happen with Bitcoin following US elections.

Markets, however, could react differently. It all depends on the official result of the US election, and the events that unfold after those results are certified.

Is Chaos Good for Bitcoin Following US Elections?

Before we get into the market for Bitcoin following US elections, it is important to understand that there could be turbulence in the short-term.

USD vs Bitcoin Following US Elections — The US Dollar might continue to tank, favoring Bitcoin following US elections

Steady markets are in everyone’s interest, however. The situation is complex:

A Biden win is the most likely outcome for the presidential election
Nevertheless, Democrats lost some seats in the House
Republicans might be able to hold onto the Senate
Presidents are not kings
A Republican Senate and a House that can flip in two years means Biden will not have the power to push for a tax reform

This is the main political movement you should monitor vis-à-vis the markets. Regulation and other issues are also important, but stability is the key factor.

Money Still Widely Available

Government revenue will not change significantly in the short-term. On the other side of the ledger, there is no indication that either administration would do anything to ameliorate growing US debt.

Presumptive winner, Joe Biden. His administration would not cut spending or reduce debt

No matter who wins the final vote count:

Debt will continue to increase especially due to the pandemic
Interest rates will remain low
A lack of stability – even if it is just a perception – will benefit the opposition

Therefore, a Biden administration much like a Trump administration, is likely to keep the economy steady on its current trajectory.

That should favor Bitcoin prices, given their recent trajectory. But the real issue here is the perception.

Biden Won, Buy Bitcoin?

Biden and the Democrats cater to the “extreme left.” These extremists favor socialist reforms that would deepen US debt.

What will Trump and his supporters do next?

If a critical mass of investors is convinced that the government will take a turn and spend on new social programs or expand expenditure on the existing ones, Bitcoin price should go up.

Broader Fundamentals

Bitcoin prices, much like investor intentions, are very hard to predict. So, your strategy should hinge on broader fundamentals.

If you see the USD weakening, BTC might not be the only asset that can gain. Investors might flock to gold – like they did in March.

No Matter What, Buy Bitcoin!

We have said this on multiple occasions. BTC is not the be all and end all, but it is the asset we believe in. Our philosophy is that you should buy Bitcoin under any circumstance.

If AOC and other extremists put together their “Trump supporter lists” looking for retribution, will that force more people to dump US Dollars and buy Bitcoin?

But it all depends on how you look at the market. If you are following the news, you know that CNN and other news outlets declared that Biden won. As that happened, Bitcoin prices came down. Is it a coincidence? Probably.

Long-Term Trends

Then you must consider that any other movement in Bitcoin markets following the US election, can also be a coincidence.

Is there any correlation between US presidential elections and Bitcoin prices?

If you focus on the long-term trend, then you will see that the price of Bitcoin following US elections is a mixed bag:

The 2012 elections had no discernible impact on BTC prices
When Trump won in 2016, Bitcoin went on its most impressive price run, reaching almost $20,000 USD by mid-December
Once Trump took office, BTC entered a long bear market
This US election cycle took place in the midst of a Bitcoin market renaissance

Institutional investors are at the center of this bull market. They could invest further in Bitcoin following US elections and erase current losses. Who knows?

Hedge Yourself Before you Wreck Yourself!

So, maybe BTC prices care as much for US elections as Bitcoin itself does. The truth is that we must wait and see, because the election was only one event that will trigger multiple future events.

Hopefully, the US goes through an orderly transition process – since it seems that Biden won and legal challenges from Trump will not succeed.

If that happens, and there is no retribution against Trump supporters for exercising their right to support the candidate they believe in, then market stability is the likely outcome.

In that case, current Bitcoin price trends should hold. However, if orderly conduct gives way to chaos, all bets are off. Should chaos erupt, we would like to take our chances with BTC. What would you prefer?