Bitcoin Could Benefit from US Fiscal Dominance and a Trump Victory
A Trump election victory could be positive for cryptocurrencies, as his administration would likely push for a more favorable regulatory environment, Standard Chartered says.
The risk of US fiscal dominance with the Federal Reserve's monetization of public debt is growing, and such a scenario should support cryptocurrencies as investors look for alternative assets, investment bank Standard Chartered said in a report from investigation on Tuesday.
Donald Trump could also be a boon for cryptocurrencies. "We believe that a second Trump administration would be broadly positive through a more favorable regulatory environment," the report says. "In a scenario of US fiscal dominance, we believe bitcoin (BTC) would provide a good hedge against de-dollarization and declining confidence in the US Treasury market," wrote analyst Geoff Kendrick.
US fiscal dominance would likely have three effects on the US Treasury curve: "a steeper nominal 2-year/10-year curve, a larger rise in breakeven points than in real yields, and an increase in the term premium," Kendrick said, adding that the price of bitcoin has increased. a positive correlation with these three potential developments.
âIn addition to the passive boost to BTC from de-dollarization, we would expect a second Trump administration to actively support BTC (and digital assets in general) through looser regulation and the approval of US spot ETFs,â adds the report. Standard Chartered reiterated its year-end bitcoin target of $150,000 and $200,000 by the end of 2025.
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