Former Trump chief of staff Mick Mulvaney said Joe Biden’s presidency would lead to a landslide. Some economists have also expressed concern that the Biden administration will push the stock market back.
This has led many cryptanalysts to wonder what effect a strong stock market correction could have on the price of Bitcoin (BTC).
In an interview with CNBC Squawk Box, Mulvaney said that Biden will introduce more bases soon. exclude:
If Trump wins, you will see much of the same. He made signs of his attitude to the regulars. If Joe Biden wins, you will see a huge stream of regulars in a very short time. ”
Deviation data shows that Bitcoin has linked more gold than stocks in recent months. Thus, it can be argued that the slowdown in the stock market can actually support Bitcoin’s sentiment.
However, as noted from March to April, a bear market share could lead to a slowdown in Bitcoin’s development.
Economists are also pessimistic
According to University of Maryland financial therapist David Cass, raising taxes under Biden would reduce profits. Over time, falling profits can cause stock prices to fall, leading to a slump in the stock market. Cass sa:
An increase in tax rates will reduce profits and is likely to lower stock prices. This effect could be offset by a broader fiscal stimulus package adopted by Congress and improved trade relations with European countries, as well as with China. ”
Other research suggests that the Biden presidency may have little influence on stock market trends.
The Wall Street Journal says that historical data shows that Biden’s choice may still allow the stock market to achieve an average annual return of 10%. Ed Venn, opinion writer for The Wall Street Journal, wrote:
“It is even possible that US investors will receive 15% or more of the annual stock return under the Biden administration.”
However, there are two possible scenarios where a fall in stocks is likely to affect Bitcoin.
First, if it leads to an improvement in the feeling towards safe assets such as gold, it may increase the chances of Bitcoin accumulating.
Second, a sharp fall in equities could take gold and bitcoin with it, as it did in March. If the latter scenario succeeds, most assets are likely to fall, with the exception of US government bonds.
What is the most likely outcome of the Bitcoin price?
With sentiment over the Biden presidency still mixed, it is very likely that this will not have a measurable effect on BTC.
When Bitcoin enters 2021, it will face a cycle after being halved as it did in 2017. In 2016, it took BTC about 17 months to reach a new peak of $ 20,000. If BTC follows a similar cycle, it will make the fourth quarter of 2021 a potential next peak for the world’s leading cryptocurrency.
In the short term, strategists expect a massive sale after the Biden election. Boston College of Strategy Vice Dean Alexander Tomisch said:
“I think what can really be detrimental to the stock market will be uncertainty of some kind: if there was some kind of instability after the election, if there was disagreement over a long period of time.”