Gold is rising and Bitcoin is too. Both are expected to continue rising in the coming weeks due to geopolitical instability, concerns about the strength of the dollar, and the upcoming elections in the U.S., according to analysts at JP Morgan.

In a report on Thursday, analysts at the bank stated that a “currency devaluation trade” is coming – which could boost demand for both gold and Bitcoin and help push prices higher. A victory for Donald Trump next week in the U.S. presidential election increases the likelihood of such a trade.

A “currency devaluation trade” is when traders try to hedge risks against weakening currencies, geopolitical headwinds, and government deficits. Gold is often a good insurance policy against weakening fiat currencies; leading asset manager BlackRock has also praised Bitcoin – referred to as digital gold – as another asset to invest in during times of instability.

“Increased geopolitical tensions and the upcoming elections in the U.S. may reinforce what some investors call ‘currency devaluation trades,’ benefiting both gold and Bitcoin,” the report noted.

Republican candidate Donald Trump not only presents himself as a cryptocurrency-friendly candidate in the race, but his tax increase policies could lead to more inflation and geopolitical tensions, the report notes.

Former President Donald Trump previously opposed cryptocurrency but has strongly supported the industry this year.

The real estate mogul stated that he wants all future Bitcoin to be mined in the U.S. and has also launched a decentralized finance (DeFi) project running on Ethereum that plans to issue its own stablecoin, Bitcoin Magazine reported earlier.

Gold has reached new highs this year and Bitcoin is now only 5% away from its all-time high in March. The largest digital currency is trading at $70,114, according to CoinGecko data, after nearly setting a new all-time high on Tuesday.

Impact on the global economy if Trump is re-elected

Proposed policy

The former U.S. president's policy proposals are expected to increase the value of the USD but could reduce GDP growth and global trade.

On November 5, the presidential election will take place in the U.S. This year, the outcome is considered unpredictable, as the two candidates from the Republican and Democratic parties, Donald Trump and Kamala Harris, are closely competing in recent national polls.

Both are committed to boosting the U.S. economy. However, Ms. Harris wants to achieve this through small changes such as increasing tax incentives for parents, raising the minimum wage, building more affordable housing, and promoting small business loans.

Meanwhile, Trump's policy proposals are considered more aggressive, including expelling a large number of immigrants, imposing high import tariffs, and reducing taxes for businesses and domestic individuals. If Trump is re-elected, these policies are expected to have a large impact on GDP, trade, and global finance.

Global growth

Throughout the election campaign, the former U.S. president proposed imposing a 10-20% tariff on imports from various countries, with China at 60%. This tariff is much higher than the current average tariff of 2% on non-agricultural goods exported to the U.S., according to government data.

“For me, the most beautiful word in the dictionary is ‘import tariff.’ That is my favorite word,” Trump said in an interview with Bloomberg last week at the Chicago Economic Club.

Most economists disagree with Trump as import tariffs would accelerate inflation, affecting American consumers and businesses that rely on imported raw materials and intermediate goods to produce finished products. Globally, these tariffs could harm overall economic growth and spark retaliatory moves from trading partners.

UBS estimates that a 60% tariff on imports from China and 10% on imports from the rest of the world would reduce global growth by 1% by 2026. Based on current trends, this decline is equivalent to 30% of the world’s GDP growth rate.

Corporate profits are expected to decrease by an average of 6%. Global stock indices will also be affected, with the strongest impact on European, Chinese, and other emerging market stocks. This could erode pension funds and the investment savings of the public, UBS warns.

Regional impact

According to ABN AMRO – a Dutch bank, the European economy could face a major shock. If the U.S. raises tariffs to 10% on all goods, the GDP damage in the eurozone would be equivalent to the energy crisis following the outbreak of the Russia-Ukraine conflict in 2022. A report from the IW economic institute (Germany) indicates that if Trump imposes a 20% import tariff on goods from the EU and the bloc retaliates, GDP in the eurozone is expected to decrease by 1.3% in 2027 and 2028.

Industries such as machinery, automobiles, and chemicals would also suffer if import tariffs to the U.S. increase, as these products accounted for 68% of EU exports to the U.S. last year. Germany – the economic powerhouse of Europe – is the most affected country as these products are primarily from German companies.

In a report last week, the International Monetary Fund (IMF) also noted the risk of a global GDP decline if import tariffs rise significantly worldwide. Accordingly, the long-term global economic growth rate could drop by 7%, equivalent to the combined economies of Germany and Japan.

Vietnam is also heavily affected

According to a mid-October report from credit rating agency Fitch, Trump's second term could reduce GDP in several Asian countries, particularly China, South Korea, and Vietnam – countries that export heavily to the U.S. In a worst-case scenario, the real GDP of these three countries could drop by at least 1% compared to Fitch's current forecast. India is minimally affected due to its economy's low dependence on exports.

Chinese officials are even preparing for the possibility of Trump winning the election. Reuters cited sources close to the matter stating that China is considering plans to issue more than 10 trillion yuan ($1.4 trillion) in bonds. The scale of stimulus could be even greater if Trump is re-elected, as the former U.S. president may pose many economic challenges to Beijing.

“Assuming Trump follows through on what he proposes, no one will escape the damage,” Maurice Obstfeld – former chief economist of the IMF said on CNN.

Source: https://tapchibitcoin.io/bitcoin-va-vang-deu-thang-neu-trump-dac-cu-theo-jp-morgan.html