Biggest digital asset faces first weekly loss in three
Bond yields jump, dollar rises as GOP frontrunner takes lead over Kamala Harris in
outlook markets
Source:
Bloomberg
Bitcoin’s status as a Trump-related trade has begun to wane amid major shifts in global markets, partly driven by the former president’s potential return to the White House.
Bond yields have surged and the dollar has gained recently as Republican nominee Donald Trump has edged ahead of incumbent Vice President Kamala Harris in the market’s expectations. Some are limiting bets on monetary policy easing because Trump would implement a pro-growth agenda in the already strong U.S. economy if he wins the presidency on Nov. 5. Bitcoin and stock prices have swung in tandem with the relative tightening in financial conditions, sending the cryptocurrency into its first weekly loss in three weeks.
Trump’s embrace of digital assets during his campaign has lifted sentiment in the cryptocurrency market, but the question is whether his more general priorities could dampen that optimism.
Cryptocurrencies and monetary tightening
“Absolutely, yes, the sell-off in stocks, the rise in the US dollar and bond yields all equate to a tightening in financial conditions. That’s not a good situation for crypto at the end of the day,” said Tony Sycamore, market analyst at IG Australia.
Bitcoin was up about 1% at $67,300 as of 6:30 a.m. in London on Thursday, trimming its weekly decline to about 2%. The largest digital asset has risen about 60% this year and hit a record high of $73,798 in March, boosted by demand for U.S. bitcoin exchange-traded funds.
Trump and Harris’ impact on crypto
Trump has vowed to make the United States the crypto capital of the world as he competes for votes with Democratic presidential candidate Kamala Harris, who has taken a more measured approach by pledging to support a regulatory framework for the sector. The two’s positions contrast with the campaign against the sector under President Joe Biden.
The two candidates were statistically tied among voters in the seven swing states in a Bloomberg News/Morning Consult poll. The razor-thin margins in those arenas suggest that the latest round of campaigning, rallies and door-to-door campaigning could decide who wins the White House.
A Trump victory could send bond yields higher and “ultimately have a negative impact on risk assets,” said Caroline Morone, co-founder of Orbit Markets, a provider of liquidity for trading digital asset derivatives. Still, “we still expect the Trump administration’s regulatory easing of the cryptocurrency sector to be the most significant and influential factor,” Morone said.
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