US politics has always played a part in Bitcoin (BTC), at least in undermining its usefulness except for dark web money laundering purposes, but mostly out of fear it would undermine or destabilize the mighty dollar.
But BTC has made significant gains compared to traditional indexes like the S&P 500, while PayPal is readying a crypto payment feature, showing that the industry is not just for dark market trades.
Yet, it only became legal in February 2020 but in many jurisdictions, legislation on Bitcoin is patchy and fluid, even a decade after BTC’s invention.
Still, government policies and politics are playing a big part in Bitcoin’s volatility, especially in this US presidential race, and even after it is concluded, regardless of who won the White House.
Bitcoin is bursting at the seams, reaching near $16,000 on November 6, and hovering in the mid $15K this weekend.
Will it continue its march to $20K and beyond?
Here’s what we know.
Bicoin’s price roar
Bitcoin has just powered up to its highest price since January 8, 2018, as FOMO grips the markets once again.
There are around 18.4 million Bitcoins currently in circulation and the digital currency economy is hovering at around $388 billion.
There could be a push higher towards that elusive all-time high of 20,000 in 2017 when in November that year, the BTC made a rapid push from $7K to top $16K in just three weeks.
The cryptocurrency went on to fall as much as 80% from its peak over the ensuing year, bottoming out near $3,700.
There’s even potential for BTC to surge past the $20,000 level, JPMorgan believes. The bank sees the potential for the crypto to more than triple in the long run as it becomes a more acceptable alternative to gold among investors.
“The potential long-term upside for bitcoin is considerable as it competes more intensely with gold as an ‘alternative’ currency we believe, given that Millennials would become over time a more important component of investors’ universe,” JPMorgan said.
But here’s a quick warning: Traders may start to take some profit at this stage which could result in a significant pullback.
Impact of US elections/government policies
Matthew Dibb, co-founder of Stack Funds, told CoinDesk: “Bitcoin’s price will be sensitive to the outcome of US elections. We expect the cryptocurrency to trade volatile in the coming days, and that is being reflected in near-dated implied volatility in the options market.”
Jason Deane, market advisory firm Quantum Economics analyst, told Forbes: “We seem to be well in the green across the board right now both in terms of markets and crypto and it seems logical that the election must be playing a part.”
Data from skew.com’s “Bitcoin ATM Implied Volatility” chart indicates that the crypto asset’s options market expects big price fluctuations. Market players trading traditional finance assets envision a similar market shakeup following the U.S. election. The 1-month implied volatility has spiked and is now hovering around 59%.
Sam Bankman-Fried, the CEO of cryptocurrency derivatives platform FTX, made the second-largest donation to former Vice President Joe Biden’s presidential campaign, in a sign of how much cryptos are lobbying for respect.
The Hong Kong-based CEO gifted Biden’s campaign a total of $5.2 million, behind only former New York Mayor Michael Bloomberg’s $56 million donation.
According to cryptocurrency news, the month is likely to experience an upturn in cryptocurrency use. The traditional economy has looked like on a path to recovery when countries opened up but a new COVID-19 wave threatens to return in most countries heralding another lockdown period and an economic downturn.
The first lockdown period jumpstarted the start of Bitcoin in March from around $3000.
Governments will introduce stimulus plans and resort to printing more cash which will devalue paper fiat and benefit cryptocurrencies.
Crypto financial planning for new generations
Gen X and millennials are used to having all their services on-demand and having the ability to fact- and price-check everything.
Robo-advisers currently have over $100 bn in assets under management (AUM), and the average age of the investors is well under 40. Those investors didn’t see the need to pay over 1% to financial advisers who did little more than pass the investing function on to third parties.
For Gen X and millennial investors, it’s likely crypto represents the next frontier of investing.
According to CB Insights, 33% of millennials don’t think they’ll need a bank at all, and 83% express openness to alternative investment strategies.
More than half of those surveyed by Grayscale said they would be more motivated to invest in bitcoin if their adviser recommends it.
Crypto can fit in with changing fee structures and service offerings. Having conversations about where crypto makes sense, and helping clients understand, buy, safely store and account for their crypto is highly needed by retail investors and the up and coming generations.
Crypto investments can be seen as a highly liquid, low-minimum, alternative risk asset, which this generation is much more open to investing in.
Cryptos and BTC appear to be the choice of today’s youth and future generations and with demand rising so will prices. Simple economics.