A contested election will send Bitcoin crashing, but not for long. Continued rate cuts are bullish for risk-on assets like crypto.
The price of Bitcoin will also increase in the event of a contested US election in November.
That's according to Adam Guren, chief investment officer of hedge fund Hunting Hill. The uncertainty of such an event would initially shake capital markets, including crypto, which would also slow the American economy.
The Federal Reserve is likely to increase further rate cuts. Nowadays, it is synonymous with rising prices.
“If there's somebody who doesn't know who the president is, we're going to be in a bit of a recession or at least a slowdown,” said Guren, who helps manage $226 million in the New York-based hedge fund. News. “In that version, you'll have more rate cuts.”
Investors brace for the impact
The US election is key for crypto investors.
Former President Donald Trump embraced the industry, backing a soon-to-be-launched crypto project called World Liberty Financial. Vice President Kamala Harris has also warmed to crypto.
Regardless of who wins, Guren said investors will have at least one question answered. That doesn't mean the markets are clear.
“There is a middle ground scene,” he said. “We have elections, then there will be competition. I obviously hope there is no such thing.
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He's not alone in those concerns, as Trump attempts a coup after the 2020 election.
The CBOE Volatility Index, which measures expected price swings in the S&P 500, is already starting to factor in post-election jolts for investment managers. Said Reuters. Similarly, the Nation's TailDex, which measures the probability of severe and impactful events known as “tail risk,” just hit a monthly high.
And rate cuts?
It also comes as the Fed is already engaged in a cycle of aggressive rate cuts.
Market watchers have raised the odds 25-basis point cut 88% at the November Fed meeting.
Anthony Scaramucci, former communications director for Trump and founder of investment firm Skybridge Capital, predicted the Fed would cut rates by 75 basis points before the end of the year.
Cheaper dollars usually mean higher prices for cryptocurrencies.
“Rate-cut cycles have produced positive price movements in Bitcoin,” Guren said. If they cut deep enough, it supercharges the property.
“If you get negative real interest rates at some point, that's where it really takes off.”
Liam is a Berlin-based correspondent News. Got a tip? Email him [email protected]
