Blockchain
Bitcoin (BTC) Could Benefit from Trump Victory and US Fiscal Dominance: Standard Chartered
The risk of US fiscal dominance as the Federal Reserve monetizes government debt is growing, and such a scenario should be favorable for cryptocurrencies as investors seek alternative assets, investment bank Standard Chartered said on Tuesday in a research report.
Donald Trump could also be a boon for cryptocurrencies. “We believe a second Trump administration would be largely positive through a more favorable regulatory environment,” the report said. “In a scenario of US fiscal dominance, let’s think about bitcoin (BTC) would provide a good hedge against de-dollarization and declining confidence in the US Treasury market,” wrote analyst Geoff Kendrick.
U.S. fiscal dominance would likely have three effects on the U.S. Treasury curve: “a steeper 2/10-year nominal curve, a greater rise in breakevens relative to real yields, and an increase in the term premium,” Kendrick said, adding that the price of bitcoin has increased. a positive correlation with all three of these potential developments.
If Trump wins the election, a second administration could accelerate the withdrawal of foreign official buyers of the US Treasury due to fiscal concerns, the bank said, noting that in his first term the average annual net sale of US government debt was 207 billion dollars per year compared to only 55 billion dollars under Biden’s presidency.
“In addition to the passive boost given to BTC by de-dollarization, we would expect a second Trump administration to actively support BTC (and digital assets in general) through looser regulation and approval of US spot ETFs,” the report adds. Standard Chartered reiterated its year-end target for Bitcoin of $150,000 and $200,000 by the end of 2025.