U.S. presidential election and weak dollar: High-octane Bitcoin drivers in 2020
The weak U.S. dollar and the U.S. presidential election will be two high-octane drivers for Bitcoin’s price in 2020.
Campaigning for the upcoming election has now stepped up to a crucial stage as Joe Biden formally accepted the Democratic nomination last week.
In addition, the dollar plummeted to a two-year low on concerns over the health of America’s economy.
Currently, the world’s largest cryptocurrency is one of the best-performing assets of the year, up around 70% year-to-date.
As such, I am of the opinion that Bitcoin will be further fuelled for the rest of 2020 due to the November 3 election and the weakness of the greenback.
A U.S. presidential election always generates uncertainty. But this year is particularly important as whoever wins will be at the helm as the world economically readjusts due to the global fallout from the coronavirus crisis.
As this uncertainty is heightened, investors will gravitate towards safe-haven assets, particularly those not tied to any specific country, like Bitcoin and gold.
Bitcoin is realising its reputation as a form of digital gold. Indeed, gold has always been seen as the ultimate safe-haven asset. Nevertheless, Bitcoin – which shares the same characteristics as gold in regard to being a store of value and scarcity – could potentially remove the precious metal from the top spot as the world is driven by the tech revolution.
Investors will be further attracted to decentralised, non-sovereign, secure digital currencies such as Bitcoin, as they provide a hedge against turbulence in traditional markets.
Indeed, inflation fears have risen, and the dollar has been devalued due to the unprecedented amounts of helicopter money being pushed into the financial system. Bitcoin cannot just be printed.
Although the dollar could receive a short-term boost, the longer the forecasts of a downward trajectory continue, the higher the chance of it losing its global reserves status. In turn, this may give Bitcoin’s price a substantial lift.
Coupled with an increasing number of millennials and Gen Z investors choosing digital assets, this could be the perfect environment for a multi-year bull market.
As a result, I think that history will prove this year was a breakout year for Bitcoin.