Geopolitical tensions and the upcoming U.S. presidential election are expected to have a significant impact on the financial markets, according to a recent report by JPMorgan. The report highlights that both Bitcoin and gold are likely to benefit from the growing tension and uncertainty surrounding the election.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, believe that a Trump victory in the election would reinforce what they call the ‘debasement trade.’ This trade is driven by factors such as tariffs and an expansionary fiscal policy, which could lead to a weakening of the U.S. dollar and increased demand for alternative assets like Bitcoin and gold.
Interestingly, the report also points out that the markets have not yet fully priced in the possibility of a Trump win. While other asset classes are not reflecting this outcome, gold and Bitcoin appear to be in a favorable position due to their perceived resilience in times of geopolitical uncertainty.
Looking back at the 2016 election, JPMorgan notes that a Trump victory led to higher U.S. Treasury yields, a stronger dollar, and outperformance in the U.S. stock market, particularly in the banking sector. However, these trends have not materialized yet, with only a slight uptick seen in these markets so far.
In contrast to JPMorgan’s view, investment bank Standard Chartered recently stated that Bitcoin is not a reliable safe haven asset in times of geopolitical risks. This differing opinion highlights the ongoing debate surrounding the role of cryptocurrencies in traditional investment strategies.
As investors navigate the complex landscape of geopolitical tensions and the upcoming U.S. election, the potential impact on various asset classes remains uncertain. Whether Bitcoin and gold will continue to rise as safe haven assets or face challenges in the face of changing market dynamics is yet to be seen. However, one thing is clear – the financial markets are closely watching the developments leading up to the election and beyond.