According to JPMorgan's latest analysis, if former President Trump wins next week’s U.S. presidential election, Bitcoin and gold may see further upside potential. This view was explicitly stated by JPMorgan analyst Nikolaos Panigirtzoglou in a report on Wednesday.
Panigirtzoglou pointed out that retail investors are actively adopting a 'devaluation trading' strategy on the eve of the election, namely buying Bitcoin and gold exchange-traded funds (ETFs) to avoid currency devaluation risks. This strategy is typically employed in the context of loose economic policies, increased money supply, or expanding fiscal deficits, as investors turn to assets perceived as stores of value to preserve wealth.
'Overall, Trump's election could not only stimulate retail investors' willingness to purchase risk assets, but also further promote the prevalence of 'devaluation trading'. Therefore, in the event of a Trump victory, Bitcoin and gold prices are expected to achieve additional increases,' analysts wrote in the report.
Currently, the competition between Trump and Democratic nominee Vice President Kamala Harris is extremely fierce. Investors are generally concerned about the government deficit, with the fiscal year 2024 deficit rising by 8% to $1.8 trillion, while both candidates have pledged to further cut taxes. In this context, Bitcoin and gold are favored by investors as hedging tools against fiscal and monetary policies that may lead to a depreciation of the dollar and rising inflation.
In terms of data, in the first two days of this week, the spot Bitcoin ETF attracted as much as $1.3 billion in new investment funds, bringing the total inflow for October to $4.4 billion, making it the third-largest net inflow month for Bitcoin funds since their inception. Meanwhile, meme coins and AI-related tokens have also outperformed the overall crypto market, driven by retail investor enthusiasm.
However, it is worth noting that the activity of institutional investors in the Bitcoin futures market seems to have stagnated. According to the cumulative position changes of CME Bitcoin futures, institutional investors appear to be in a wait-and-see mode over the past two weeks. Additionally, Bitcoin futures have shown signs of being 'considerably overbought', which may indicate certain vulnerabilities in the market in the future.
Similar to Bitcoin, the gold market also shows a phenomenon where retail investors are actively purchasing gold ETFs, while activity in the gold futures market is relatively stagnant.
In summary, if Trump wins next week’s election, it may bring new upward opportunities for the Bitcoin and gold markets. However, investors should also be wary of potential market vulnerabilities and closely monitor the movements of institutional investors as well as changes in global economic policies. btc0955
