JPMorgan Analysts Say Trump’s Win Could Fuel Gold and Bitcoin’s Debasement Trade
According to a research paper released by JPMorgan on Wednesday, geopolitical turmoil and the impending U.S. presidential election are anticipated to be the driving forces behind the debasement trade, which benefits both Bitcoin and gold.
A Trump win in particular, apart from being supportive of bitcoin from a regulatory point of view, would likely reinforce the ‘debasement trade’ both via tariffs (geopolitical tensions) and via an expansionary fiscal policy (‘debt debasement’),
analysts led by Nikolaos Panigirtzoglou
JPMorgan: U.S. Stocks, Banks, and Treasury Yields Could Surge if Trump Trade Repeats 2016 Pattern
Markets aren’t pricing in a victory for the former president just yet. The analysis stated that because investors have been focused on the recession trade in recent months, the likelihood of a Trump election victory is now priced in with a low probability when considering asset classes other than Bitcoin and gold.
According to JPMorgan, there should be tighter credit spreads, a stronger currency, higher U.S. Treasury yields, and an outperformance of the U.S. stock market overall—particularly among banks—if the Trump trade plays out similarly to 2016. These markets have just seen a slight increase. Thus, this transition has not yet occurred.
The Dollar Index (DXY) increased by 8%, US equities outperformed by 6%, banks outperformed the rest of the S&P 500 stock index by 15%, and high-grade corporate credit spreads tightened significantly during the six months surrounding the 2016 US election, according to JPMorgan.
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