Bitcoin Set To Gain If Trump Wins, JPMorgan Cites ‘Debasement Trade’ As Key Factor

Ash Tiwari

8 months ago

3 mins read

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According to JPMorgan analysts, a win for the Republican US presidential candidate Donald Trump could further fuel Bitcoin (BTC) price momentum.

Retail Investors Turn To Bitcoin For ‘Debasement Trade’

In a recent client note, analysts at JPMorgan suggested that a Trump win might provide ‘additional upside’ for both BTC and gold, as retail investors increasingly view Bitcoin as a ‘debasement trade.’

In simple terms, a debasement trade is a strategy to protect purchasing power against the steady erosion of fiat currencies due to extensive money printing.

Notably, the M2 money supply – a measure of total money in circulation – sharply rose during the coronavirus pandemic. This surplus in money supply led to heightened inflation, forcing the U.S. Federal Reserve (Fed) to raise interest rates to contain it.

By purchasing BTC, retail investors aim to maintain their money’s value, hoping Bitcoin will act as a hedge against currency depreciation. The JPMorgan note states:

Retail investors appear to be embracing the ‘debasement trade’ in an even stronger manner by buying bitcoin and gold ETFs. The retail impulse is also seen in meme and AI tokens the market cap of which has outperformed.

Data from SoSoValue shows that Bitcoin exchange-traded funds (ETF) have attracted a whopping $1.3 billion in inflows over the past two days alone. As of October 30, the cumulative net inflow to US-based spot BTC ETFs is $24.18 billion.

October’s total ETF inflows alone amount to $4.4 billion, marking it the third-highest month for BTC ETF inflows since their launch earlier this year.

However, institutional investors appear to have slowed down on BTC futures activity recently, with analysts noting that Bitcoin futures have entered overbought territory, potentially introducing vulnerability for BTC’s near-term outlook.

The client note highlights that credit and prediction markets lean toward a Trump win, unlike equities, foreign exchange (FX), and rates markets. The analysts conclude:

Overall, to the extent a Trump win inspires retail investors to not only buy risk assets but to also further embrace the ‘debasement trade’, there could be additional upside for bitcoin and gold prices in a Trump win scenario.

Where Is BTC Headed? Analysts Share Their Outlook

Bitcoin is trading within 2% of reaching a new all-time high (ATH), driving renewed optimism among crypto analysts.

For instance, crypto analyst Timothy Peterson recently posited that BTC could surge to as high as $100,000 by February 2025.

Meanwhile, crypto options trading data indicates that traders remain confident BTC will hit $80,000 by the end of November 2024, regardless of the election outcome.

Veteran trader Peter Brandt, however, has urged caution, advising BTC bulls that a daily close above $76,000 is critical for confirming a true breakout. At the time of writing, BTC is trading at $71,798, down 0.1% in the past 24 hours.

Featured image from Unsplash, Charts from FRED and Tradingview.com

Ash Tiwari

Ash is a dedicated crypto researcher and blockchain enthusiast with a passion for diving deep into the evolving world of decentralized technologies. With a background in writing and a natural curiosity for how digital assets are shaping the future, he has immersed himself in various sectors of the cryptocurrency space, including decentralized finance (DeFi), NFTs, and liquidity mining. His journey into crypto started with a desire to fully understand the technology behind it, leading him to explore and engage with these systems firsthand.

Ash’s approach to DeFi goes beyond surface-level research as he actively participates in decentralized protocols, testing their functionality to gain a deeper understanding of how they operate. From experimenting with staking mechanisms to exploring liquidity mining strategies, he is hands-on in his exploration, which allows him to provide practical, real-world insights that go far beyond theoretical knowledge. This immersive experience has helped him develop a comprehensive grasp of smart contracts, token governance, and the broader implications of decentralized platforms on the future of finance.

In the NFT space, Ash’s interest is driven by the technology’s potential to reshape ownership and creativity in the digital age. He has explored various NFT projects, gaining insights into how these digital assets function within different ecosystems. His focus is on understanding the evolving relationship between creators and communities, as well as the innovative uses of blockchain technology to establish authenticity and provenance in the digital world. Ash’s research in this area often touches on the intersection of culture, technology, and community-driven projects.

A key area of his expertise lies in liquidity mining, where he has engaged with various decentralized platforms to understand how liquidity provision contributes to the functionality and security of DeFi ecosystems. Ash’s hands-on involvement has allowed him to analyze the risks, rewards, and broader implications of liquidity pools, giving him a well-rounded perspective on this integral part of DeFi. His understanding of risk management and protocol design allows him to provide insights into how these systems can be navigated effectively, with an emphasis on both opportunity and caution.

When it comes to communicating these complex topics, Ash’s writing is grounded in clarity and depth. He excels at breaking down intricate blockchain concepts into easily digestible information for a wide audience. Whether explaining the workings of decentralized exchanges or outlining the future potential of blockchain technology, Ash ensures that his content is accessible to both those new to the space and experienced participants looking for deeper insights.

Beyond DeFi and NFTs, Ash explores a wide array of emerging blockchain applications. His research spans areas like cross-chain technologies, decentralized governance, and blockchain’s potential to integrate with traditional finance. He is continuously learning and adapting to the latest developments, ensuring that his insights are both timely and relevant. His interest extends to how these technologies are creating new possibilities for decentralization, transparency, and trust in a variety of industries.

Ash’s commitment to engaging with the crypto space firsthand gives him a unique perspective that goes beyond what can be learned from research alone. His practical involvement allows him to stay ahead of the curve, offering readers and enthusiasts a clear and comprehensive understanding of the rapidly evolving world of blockchain. Whether delving into the technical mechanics of DeFi or exploring the cultural impact of NFTs, Ash’s approach is always rooted in curiosity, research, and a desire to make this technology accessible to all.

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