Bitcoin and Gold Positioned to Benefit from Geopolitical Risks and U.S. Election Dynamics, Says JPMorgan

• JPMorgan analysts point out that the current Bitcoin (BTC) price has not priced in the odds of Trump’s victory in the upcoming US presidential election. 

• Standard Chartered Bank has also admitted that the digital asset is not a safe haven; however, it is important to purchase the dip. 

A recent JPMorgan research report suggests that Bitcoin (BTC) and Gold could significantly benefit from the upcoming US presidential election and the existing geopolitical risks. According to the lead analyst, Nikolaos Panigirtzoglou, Donald Trump’s win could reinforce “debasement trade.”

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 an expansionary fiscal policy (‘debt debasement’).

According to the report, the market has yet to price the probability of Trump’s victory. The reason is that traders are currently focused on the ongoing market pullback. Taking a cue from the 2016 US election that saw Bitcoin skyrocketing to an all-time high price of nearly $20,000 in December 2017, JPMorgan believes that the shift from the upcoming event could have a larger impact. This time around, there could be higher US Treasury yields, outperformance of the stock market, a stronger dollar, and tighter credit spreads. 

Based on data, the 2016 US election saw the 5-year Treasury yields rising by 1% in the six-month window, while the Dollar Index (DXY) also rose by 8%. In addition to that, U.S. equities surged by 6%. 

At press time, Bitcoin was down by 6% in the last seven days after the Iran-Israel tension forced the price down below a crucial support level. As we reported on October 2, this tension forced a liquidation of $250 million in futures positions, “dragging” the Bitcoin price to $61k. 

Standard Chartered Weighs in Bitcoin’s Position in the Face of Geopolitical Risks

According to investment bank Standard Chartered, the Middle East conflict could likely cause the Bitcoin price to fall below $60k before the weekend. To them, it would be rewarding to purchase the dip. Contrary to Bitcoin’s recognition as a hedge against inflation, Standard Chartered clarified in its report that the asset is not a safe haven against geopolitical risk. 

Gold is a geopolitical hedge. BTC is a hedge against TradFi issues such as bank collapses or de-dollarisation/U.S. Treasury issues.

Similar to JPMorgan’s position, Standard Chartered Bank mentioned that Trump’s probability of winning the upcoming election could offset the impact of the geopolitical tension that is currently weighing down on the price of Bitcoin. In a CNF analysis of market data, it was observed that the open interest for the Bitcoin December expiry at 80,000 is fast-rising. Meanwhile, institutional investors are also purchasing the asset aggressively, according to the chief analyst of Bitget Research, Ryan Lee. 

Despite the general downturn, institutional investors continue to buy digital currency at a rate at par or higher than the quantity mined daily.

In the past ten days, whales are reported to have purchased about 50,000 BTC ($3.15 billion). At $60.1k, the asset tested the 200-day Exponential Moving Average (EMA) to establish strong historical support. According to analysts, Bitcoin would have to secure the 1-day 200 moving average (MA) at $63,600 to trigger an upsurge.