Macro Outlook: Bitcoin and the U.S. Election

This year has been the most important macro-driven year in bitcoin’s history. From the Q1 Covid-19 sell-off and subsequent monetary easing to the massive inflow of institutional and corporate involvement in Q2 and Q3, macro events have influenced bitcoin’s price throughout the year. This trend doesn’t appear to be slowing down anytime soon. With the election today, additional dominos could fall that could drive cryptocurrency prices even further into the foreseeable future.

The US election has widespread ramifications across the global economy. These include how the government will manage Covid-19, the Federal Reserve’s intervention through the use of quantitative easing, and the impact of inflation. Paul Tudor Jones recently touched on these points in an interview with CNBC where he also elaborated on why he invested 2% of his funds into bitcoin as a potential hedge against inflation.

After hearing Jones’s comments, I reached out to Brett Steenbarger, a legendary trading psychologist and advisor to several macro hedge funds, for more color on Tudor’s remarks. During our conversation, we discussed election probabilities, the dollar, the post-election stock market, commodities such as gold, and potential implications for bitcoin.

Post Election Outlook

Politics

The majority of polls have Biden holding a 60%+ chance of winning the presidential election and even higher potential for a blue wave sweep through the senate. The effects of these could mean larger stimulus packages, more QE, and clear guidance for investors going into a new administration.

A weaker dollar from Quantitative Easing (QE)