On Monday (July 8), Bitcoin fell sharply in the short term and hit $54,287, then rebounded slightly to above $55,000, but the bears still firmly controlled the steering wheel. The Financial Times reported that Bitcoin will rebound at the end of July, and the US presidential election in November will usher in "Trump fever", and the price of the currency is expected to reach $100,000.

As the U.S. presidential election draws closer, cryptocurrency traders and analysts are hoping that a Trump victory in November will lift the bitcoin price out of its recent slump.

Bitcoin, a reliable proxy for all cryptocurrency activity, peaked in mid-March and has struggled to make progress since April’s so-called halving event, when the number of daily bitcoins that miners can share in securing the network dropped from 900 to 450.

The article wrote: "This breaks many predictions that Bitcoin will start to rebound after the halving, which is widely believed by the market."

Analysts attributed the underperformance to a large amount of potential selling in the market, with the defunct Mt Gox, the former largest crypto exchange, selling $9 billion worth of Bitcoin and Bitcoin Cash (BCH); possible sales of Bitcoin by miners; and signals from U.S. and German authorities in the past two weeks that they were moving large amounts of criminally seized cryptocurrency to cryptocurrency exchanges.

“The two authorities hold over $15 billion worth of Bitcoin, which is enough to generate potential selling pressure and make short-term Bitcoin holders nervous,” said analysts at cryptocurrency venture capital firm Ryze Labs.

Traders have also noted the role of bitcoin basis trades, where hedge funds use borrowed money to bet on the convergence of bitcoin futures and spot ETF prices, in dampening volatility.

As the market searches for the next catalyst, talk of a “Trump trade” is growing, with the prospect of a Trump victory in November likely to drive Bitcoin higher in the second half of the year. This belief has only grown since the first televised U.S. presidential debate.

This optimism is attributed to Trump being the more crypto-friendly candidate and his policies will make assets like Bitcoin more attractive to the world.

He has already adopted a more open attitude toward the industry, such as hosting crypto mining executives at Mar-a-Lago, accepting crypto donations, and generally making positive noises.

Industry executives hope that Trump’s victory in the White House and a strong Republican presence in Congress will mean Washington is ultimately more willing to pass clear and favorable cryptocurrency regulations.

“Cryptocurrency mining companies will also benefit, especially from Trump’s energy policy proposals, which could allow the use of alternative energy sources for bitcoin mining,” said Julius Baer analyst Manuel Villegas.

He added: “Biden’s previous tax proposals on cryptocurrency miners, such as a 30% levy, are unlikely to be realized under the Trump administration.”

The second view is also beginning to permeate the traditional financial sector. What does a second Trump term mean for the broader financial markets?

The market currently expects that stricter immigration policies, more tariffs on foreign goods and tax cuts will increase the US deficit and lead to higher inflation and higher US Treasury yields.

Geoff Kendrick, an analyst at Standard Chartered Bank, believes Trump's policies could create "fiscal dominance" when government deficits and debt grow so large that the central bank's main weapon, interest rate changes, can have only limited impact.

This, he said, would affect the price of Bitcoin because the cryptocurrency tends to have a reasonable correlation with some key U.S. Treasury indicators, such as the spread between the 2-year and 10-year Treasury bonds and the break-even rate.

He believes that a steeper curve and higher break-even rates than actual yields should push up the price of Bitcoin because it would be a good hedge against declining confidence in the U.S. Treasury market.

Trump's trade is based in part on Biden being his opponent in November, with the RealClearPolitics betting average, a composite forecasting site, showing Trump's odds at 55% while Biden's odds are just 16.5%, having dropped significantly over the past week.

This suggests that Bitcoin bulls will gain momentum if Biden continues to run. If he drops out and a new candidate is seen as having a chance to defeat Trump, Bitcoin could continue to struggle.

Still, that may not matter. Theories about Bitcoin, whether as an inflation hedge or an alternative to the financial system, tend to fall apart when they come into contact with reality.

But this misses the point, as Ben Hunt, chief investment officer at asset manager Second Foundation, eloquently wrote on his Epsilon Theory blog this week: “Behavior will only change if we believe that everyone else believes the information.”

If enough people think Trump will win, the cryptocurrency market will change.

Kendrick said the most likely outcome is that by the end of July, Biden's candidacy will become increasingly clear, Trump's chances of winning will increase further, and Bitcoin prices will rise.

“August could see a new all-time high, with $100,000 hitting by Election Day.”

The Financial Times report concluded that all markets need a story to maintain their momentum, but Bitcoin has no cash flow and therefore needs a story more than most markets. This trend is expected to continue into the summer as the market clears excess sales.

On Monday (July 8), Bitcoin fell sharply in the short term and hit $54,287, then rebounded slightly to above $55,000, but the bears still firmly controlled the steering wheel. The Financial Times reported that Bitcoin will rebound at the end of July, and the US presidential election in November will usher in "Trump fever", and the price of the currency is expected to reach $100,000.

As the U.S. presidential election draws closer, cryptocurrency traders and analysts are hoping that a Trump victory in November will lift the bitcoin price out of its recent slump.

Bitcoin, a reliable proxy for all cryptocurrency activity, peaked in mid-March and has struggled to make progress since April’s so-called halving event, when the number of daily bitcoins that miners can share in securing the network dropped from 900 to 450.

The article wrote: "This breaks many predictions that Bitcoin will start to rebound after the halving, which is widely believed by the market."

Analysts attributed the underperformance to a large amount of potential selling in the market, with the defunct Mt Gox, the former largest crypto exchange, selling $9 billion worth of Bitcoin and Bitcoin Cash (BCH); possible sales of Bitcoin by miners; and signals from U.S. and German authorities in the past two weeks that they were moving large amounts of criminally seized cryptocurrency to cryptocurrency exchanges.

“The two authorities hold over $15 billion worth of Bitcoin, which is enough to generate potential selling pressure and make short-term Bitcoin holders nervous,” said analysts at cryptocurrency venture capital firm Ryze Labs.

Traders have also noted the role of bitcoin basis trades, where hedge funds use borrowed money to bet on the convergence of bitcoin futures and spot ETF prices, in dampening volatility.

As the market searches for the next catalyst, talk of a “Trump trade” is growing, with the prospect of a Trump victory in November likely to drive Bitcoin higher in the second half of the year. This belief has only grown since the first televised U.S. presidential debate.

This optimism is attributed to Trump being the more crypto-friendly candidate and his policies will make assets like Bitcoin more attractive to the world.

He has already adopted a more open attitude toward the industry, such as hosting crypto mining executives at Mar-a-Lago, accepting crypto donations, and generally making positive noises.

Industry executives hope that Trump’s victory in the White House and a strong Republican presence in Congress will mean Washington is ultimately more willing to pass clear and favorable cryptocurrency regulations.

“Cryptocurrency mining companies will also benefit, especially from Trump’s energy policy proposals, which could allow the use of alternative energy sources for bitcoin mining,” said Julius Baer analyst Manuel Villegas.

He added: “Biden’s previous tax proposals on cryptocurrency miners, such as a 30% levy, are unlikely to be realized under the Trump administration.”

The second view is also beginning to permeate the traditional financial sector. What does a second Trump term mean for the broader financial markets?

The market currently expects that stricter immigration policies, more tariffs on foreign goods and tax cuts will increase the US deficit and lead to higher inflation and higher US Treasury yields.

Geoff Kendrick, an analyst at Standard Chartered Bank, believes Trump's policies could create "fiscal dominance" when government deficits and debt grow so large that the central bank's main weapon, interest rate changes, can have only limited impact.

This, he said, will impact the price of Bitcoin because the cryptocurrency tends to have a reasonable correlation with some key U.S. Treasury indicators, such as the spread between the 2-year and 10-year Treasury bonds and the break-even rate.

He believes that a steeper curve and higher break-even rates than actual yields should push up the price of Bitcoin because it would be a good hedge against declining confidence in the U.S. Treasury market.

Trump's trade is based in part on Biden being his opponent in November, with the RealClearPolitics betting average, a composite forecasting site, showing Trump's odds at 55% while Biden's odds are just 16.5%, having dropped significantly over the past week.

This suggests that Bitcoin bulls will gain momentum if Biden continues to run. If he drops out and a new candidate is seen as having a chance to defeat Trump, Bitcoin could continue to struggle.

Still, that may not matter. Theories about Bitcoin, whether as an inflation hedge or an alternative to the financial system, tend to fall apart when they come into contact with reality.

But this misses the point, as Ben Hunt, chief investment officer at asset manager Second Foundation, eloquently wrote on his Epsilon Theory blog this week: “Behavior will only change if we believe that everyone else believes the information.”

If enough people think Trump will win, the cryptocurrency market will change.

Kendrick said the most likely outcome is that by the end of July, Biden's candidacy will become increasingly clear, Trump's chances of winning will increase further, and Bitcoin prices will rise.

“August could see a new all-time high, with $100,000 hitting by Election Day.”

The Financial Times report concluded that all markets need a story to maintain their momentum, but Bitcoin has no cash flow and therefore needs a story more than most markets. This trend is expected to continue into the summer as the market clears excess sales.