Big Tech Beats Bitcoin as Unwinding Trump Trade Weighs on Token

(Bloomberg) — Bitcoin missed a rally among assets that was fueled by the Federal Reserve’s lukewarm comments as the U.S. election race heats up and casts doubt on whether Donald Trump will get a chance to implement his pro-crypto agenda.

Most Read from Bloomberg

The digital asset fell 2.4% on Wednesday, lagging a Fed-backed rally in an index of Magnificent Seven tech megacap stocks by one of the widest margins of 2024. The token fell below $64,000 in Asia on Thursday.

The original cryptocurrency has become a sort of indicator of Trump’s chances of returning to the White House after Republican candidate Trump promised to make the US “the crypto capital of the planet and a Bitcoin superpower.”

Presumptive Democratic nominee Kamala Harris, who has been riding a wave of enthusiasm among young, Black and Hispanic voters, has cut into Trump’s lead in seven closely contested states. Harris also now has a better chance of winning than Trump on the PredictIt marketplace for betting on political outcomes. The Harris campaign has yet to take a stance on the digital asset industry.

Noelle Acheson, author of the Crypto Is Macro Now newsletter, called Harris’ “climbing fortunes” a “political factor” that has been weighing on the digital asset’s price. Kyle Doane, head of trading at Arca, said some of Bitcoin’s recent weakness could be due to Harris’ “slow rise in the polls.”

Trump questioned Vice President Harris’ racial identity and failed in his attempt to reach out to voters of color during a contentious roundtable discussion at the National Association of Black Journalists convention in Chicago on Wednesday.

Bitcoin’s surge is a sign of a broader reassessment in markets about so-called Trump transactions, which came into focus last month as the former president appeared to have a better chance of victory in the November U.S. election.

Outside of politics, the cryptocurrency market has recently been grappling with the possibility of Bitcoin being sold off after it was seized by the U.S. government, and the risk that some creditors of the bankrupt Mt. Gox exchange will sell off the recovered tokens.

Fed Chairman Jerome Powell signaled on Wednesday that the central bank is on track to cut interest rates in September if inflation doesn’t stall. The prospect of easier monetary policy has helped fuel recoveries in U.S. stocks and bonds.

The story continues

Bitcoin has rallied more than 45% this year, helped by inflows into U.S. exchange-traded funds for the token. The rally has since faded after reaching a record high of $73,798 in March, two months after the ETFs went live.

–With assistance from Olga Kharif.

Most Read from Bloomberg Businessweek

©2024 Bloomberg LP