Bitcoin and Gold Could Profit from Geopolitical Tension and US Elections

In its research report published yesterday, JPMorgan (JPM) said that geopolitical tension and the upcoming US presidential elections will likely support “debasement trade” and that this will favor both bitcoin (BTC) and gold.

“A Trump win, in particular, will strengthen this situation through both geopolitical tension and fiscal policy, as well as supporting bitcoin from a regulatory perspective,” wrote analysts led by Nikolaos Panigirtzoglou.

Markets have not yet priced in the possibility of a repeat victory for the former president. The report stated that this is because investors have been engaged in recession trading in recent months.

If the “Trump trade” plays out similarly to 2016, higher U.S. Treasury yields, a stronger dollar, as well as outperformance of the U.S. stock market, particularly banks, and tighter credit spreads are expected, JPMorgan said.

JPMorgan found that 5-year Treasury yields rose 1% and the Dollar Index (DXY) rose 8% during the six-month period of the 2016 American election, while US stocks outperformed by 6% and banks outperformed the rest of the S&P 500 stock index by 15%. He stated that the ratio has fallen behind and high-grade corporate credit spreads have tightened significantly.

Investment bank Standard Chartered stated in its report published yesterday that bitcoin is not a safe haven against geopolitical risks.