Based on the latest projections, Joe Biden will be the 46th US President and the next 4-years term will very likely resonate differently as compared to the one of Donald J. Trump. Three weeks ago we’ve talked about the implications of the US election on the crypto market and now that the event is behind us, we should start to consider what could that mean for the future.
Democrats want higher spending
There is no secret that the Democratic Party would like much higher government spending on programs related to social security or environmental protection. Now that the US economy is facing a severe downturn generated by the COVID-19 pandemic, passing a large stimulus bill had been debated for months, with no resolution found yet.
Larger deficits in the US combined with a growing FED balance sheet equal debt monetization and that will very likely put pressure on the US dollar. Since the global reserve currency has a 0% interest rate and prospects for further weakness, investors around the world are looking for hard assets as opposed to cash.
In case the Democratic plans will see the light at the end of the tunnel, Bitcoin and many other altcoins could grow in value if we take the value denominated in the US dollar or other reserve currency like the EUR or GBP.
Difficulties generated by a divided Congress
New stimulus is not a done deal yet, considering the Democrats failed to secure a majority in the Senate and narrowed their advantage in the House of Representatives. On one side, that’s good news because it vanishes the prospects for higher corporate taxes, but on the other, it makes it very difficult to pass a large stimulus bill.
Republicans in the Senate are extremely conservative when it comes to spending and had already communicated the fiscal stimulus provided this year is enough. We’ve talked that the winter prospects for crypto are uncertain and with no stimulus to come by the beginning of the new year, Bitcoin and its peers could start to weaken, even though the current market mood is extremely bullish.
Although Bitcoin managed to reach $16,000, things are shaping up to be volatile in the following weeks, as the severity of the COVID-19 and potential other disappointments could start to weigh on risk sentiment and make investors put into question the elevated valuations of Bitcoin. What do you think about the impact of Joe Biden’s Presidency on BTC and will there be significant correlations between the two?