(Bloomberg) — Bitcoin’s classification as a so-called Trump trade is beginning to be shaken by broader changes in global markets, partly due to the former president’s possible return to the White House.
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Bond yields and the dollar have soared in recent days, with Republican candidate Donald Trump leading Vice President Kamala Harris in prediction markets. One view is that investors are holding back bets on easy monetary policy if President Trump wins on Nov. 5, applying pro-growth policies to the already robust U.S. economy.
This tightening in relative financial conditions has spooked Bitcoin and stocks, with the token facing its first weekly loss in three weeks. Trump embraced the digital asset industry during the campaign and boosted sentiment towards crypto markets, but whether the impact of his broader priorities might temper such optimism. The question arises.
“Certainly, lower equities, a stronger US dollar and higher yields all equate to tightening financial conditions,” said Tony Sycamore, market analyst at IG Australia. “This is not good for crypto at the end of the spectrum.” said. Some may point out that the financial environment was originally accommodative, but the pace of tightening is actually greater. ”
As of 9:10 a.m. Thursday in London, Bitcoin was up about 1% to $67,127, capping its weekly decline to about 2%. The largest digital asset has risen about 60% this year, hitting a record high of $73,798 in March, buoyed by demand for U.S. spot Bitcoin exchange-traded funds (ETFs).
President Trump has vowed to make the United States the crypto capital of the planet in a race against Democratic candidate Harris, who has pledged to uphold a regulatory framework for the industry and has taken a more cautious approach. Their position stands in contrast to the crackdown on the sector under President Joe Biden.
A Bloomberg News/Morning Consult poll shows candidates statistically tied with voters in each of the seven swing states in the United States. The razor-thin margins on these battlefields highlight how the final assault of ads, rallies and door-knocking campaigns will determine the White House's case.
Caroline Moron, co-founder of Orbit Markets, which provides liquidity for trading digital asset derivatives, said a Trump victory would lead to higher yields and ultimately a “negative impact on risk assets.” He said there was a possibility of a connection. Still, “the expected deregulation of the crypto industry by the Trump administration should still be a more important factor,” she said.
