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According to JP Morgan analysts, the victory of US Republican presidential candidate Donald Trump could increase Bitcoin (BTC) price momentum.
Retail Investors Turn to Bitcoin for ‘Depreciation Trade’
Recently Customer noteAnalysts at JP Morgan suggested that a Trump win could provide “additional upside” for both Bitcoin and gold, as retail investors increasingly view Bitcoin as a “trade smash.”
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In simple terms, discount trading is a strategy to protect purchasing power against the continuing erosion of fiat currencies due to widespread money printing.
Notably, the M2 money supply – a measure of total money in circulation – has risen sharply during the coronavirus pandemic. This surplus in the money supply led to high inflation, forcing the US Federal Reserve to raise interest rates to contain it.
By purchasing Bitcoin, retail investors aim to preserve the value of their money, with the hope that Bitcoin will act as a hedge against a decline in the value of the currency. JPMorgan’s memo states:
Retail investors appear to be embracing the “dip trade” in a stronger way by purchasing Bitcoin and gold ETFs. The retail drive can also be seen in meme and AI tokens that have outperformed their market cap.
Data from SoSoValue He appears Bitcoin exchange-traded funds (ETFs) have attracted massive inflows of $1.3 billion over the past two days alone. As of October 30, the cumulative net inflow into US spot BTC ETFs was $24.18 billion.
Total ETF inflows in October alone reach $4.4 billion, marking the third-highest month for Bitcoin ETF inflows since its launch earlier this year.
However, institutional investors appear to have slowed down on Bitcoin futures activity recently, with analysts noting that Bitcoin futures have entered overbought territory, which could lead to a weakening of Bitcoin’s near-term outlook.
The client note highlights that the credit and forecast markets are tilted toward a Trump win, unlike the equity, forex, and interest rate markets. Analysts conclude:
Overall, to the extent that a Trump win inspires retail investors not only to buy risk assets, but also to embrace more “drip trading,” there may be additional upside for Bitcoin and gold prices in a Trump win scenario.
Where is Bitcoin headed? Analysts share their forecasts
Bitcoin is trading 2% away from hitting a new all-time high (ATH), sparking renewed optimism among cryptocurrency analysts.
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For example, cryptocurrency analyst Timothy Peterson recently Presumably That BTC could rise to $100,000 by February 2025.
Meanwhile, crypto options trading data Pointing Traders remain confident that Bitcoin will reach $80,000 by the end of November 2024, regardless of the election outcome.
However, veteran trader Peter Brandt urged caution. Advise BTC bulls see a daily close above $76,000 as crucial to confirming a true breakout. At the time of writing, Bitcoin is trading at $71,798, down 0.1% over the past 24 hours.
Featured image from Unsplash, charts from FRED and Tradingview.com
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