United States presidential election 

Image source under CC: flickr.com

The US elections are just a day ahead of us and there are considerable challenges faced by the country this time around. While it is up to the American public to decide what kind of leader they want to choose from, the aftershocks of the election are usually felt around the world. The Bitcoin price index is also expected to be influenced because of this year’s election. But, how will it respond to the developments across the Atlantic? Will Bitcoin holders see their worth increase or decrease during this exercise? Let us discuss!

The Uncertainty around 2020 Elections

Without getting into the politics of things, it is expected that this electoral process will be a more volatile transfer of power than ever seen in the American history. This is true especially considering the uncertainty surrounding the results declaration process that might take a long time because of record mail-in ballots and the slow overall counting process. One candidate in particular, the incumbent Donald Trump has even cast doubts about whether he will be willing to accept the election results altogether. While overall, Joe Biden, the democratic challenger is leading in the polls, the election could go to the wire and the country’s top judicial body, the Supreme Court may even have to be involved. All of this might take a while and we might not see who is the winner for potentially a long time, possibly for a month if the losing candidate is unwilling to concede. 

How are other Assets Responding?

The stock market is already being cautious in the buildup elections and has lost up to 5% 1-2 days before election night. The USD is also extending its losing streak against other fiat currencies of the world and that is adding selling pressure on the markets. The Gold/USD index is creeping upwards and touching around $1900 per ounce at the time of writing. While it is still short of the record set back in August of $2070, it is expected to rise sharply as well if the crisis is prolonged over time. Gold being a safe haven is going to be the buyers’ ultimate choice in the case of this man-made potential disaster. 

Overall, we might only have 36 hours before election day starts but there is still plenty of time to trigger a collapse. The way things are going with an uncertain outcome, these traditional assets are showing mixed results with safe havens increasing their worth while more volatile assets like stocks going on a small losing streak. 

How will the Bitcoin Price Index Respond?

Currently, the Bitcoin price index has lost around 3-4% during the last 48 hours. Many analysts blame this hiccup on the upcoming US elections. However, many also believe that the cryptocurrency is consolidating around the $13.5k level before taking down the long-term resistance of $14k once and for all. So, there are mixed perceptions around the effects of the election on the cryptocurrency price index. 

However, the elections may affect the Bitcoin price decisively if the results are contested or they drag along possibly over a month. The reason is that the US citizens are among the highest number of crypto holders around the world. If the election results are not going in the spirit of democracy, citizens will panic and start shifting their wealth to safe havens and assets just like it was witnessed in the start of the global pandemic back in March this year. Gold, weapons, rations, etc are generally considered the choice assets in the United States in the event of a crisis and these things may need cash so citizens will look to liquidate their positions and head to the stores for stockpiling. So, the Bitcoin price index may suffer a little dip due initially as the public panics. However, if the election drama plays out, the cryptocurrency’s price index is expected to recover strongly and then start posting massive growth as people flip assets trying to buy the ones that will prove to be useful in the future. 

Will the Price Index not Respond this Way?

All of this may not happen at all if it is all over at election night and there is a clear winner and the loser concedes. In that case, every major asset may experience a slight uptick including cryptocurrencies themselves. However, it is increasingly unlikely that this will not happen this time around due to petty fights and the never-back-down attitude adopted by both major candidates.