Trump Victory Could Spark Bitcoin Rally

The cryptocurrency market has been stagnant since the halving event in April, with bitcoin’s price dropping 15% and falling below $54,000. Analysts attribute this to the large amount of potential sales overhanging the market, including $9 billion in bitcoin and bitcoin cash sales from defunct Japanese exchange Mt Gox.

The “Trump Trade”

Some traders believe that a victory for Donald Trump in November could revive the market. Trump has been more open to the crypto industry, hosting crypto mining executives at Mar-a-Lago and accepting contributions in crypto. Industry executives hope that a Trump White House and strong Republican showing in Congress will lead to clear and favorable crypto regulations.

Policies and Market Expectations

Trump’s policies, including his energy policy proposals and potential tax cuts, could create “fiscal dominance,” where the government deficit and debt grow so large that the central bank’s main weapon, interest rate moves, has limited impact. This could affect the price of bitcoin, which tends to have a reasonable correlation with US Treasury markers.

The Impact of a Trump Victory

If Trump wins, the market expects a potential bitcoin rally in the second half of the year. Analysts at Ryze Labs believe that a Trump victory could lead to a fresh all-time high in August, with a price of $100,000 by US election day.

The Role of Narrative

Markets need a narrative to sustain their momentum, and bitcoin, which has no cash flows, has more need than most. As the sales overhangs are cleared by the market, expect this narrative to build through the summer.

Weekly Highlights

• Defunct California bank Silvergate will pay $63 million to settle civil charges brought by federal and state regulators.
• The US Marshals Service has chosen Coinbase to custody crypto assets it seizes as part of US government criminal investigations.
• Bitcoin mining firm Genesis Digital Assets is considering an IPO in the US.
• Centralised crypto exchanges had a strong first half, with total aggregate spot volumes rising $10.6 trillion compared with $4.32 trillion in the second half of last year.