The Bitcoin price index has suffered a slight hiccup after it was predicted by Bank of America (BofA), a market analyst firm that the stock market is in for a 20% crash in the near future due to the incoming US elections and the uncertainty that surrounds a peaceful transfer of power. While the stock market has been reclining slowly after reaching record highs during the Covid summer, the Bitcoin price index is increasing swiftly.
The Bitcoin price index has a complex relationship with the more conventional stock markets. Many times like back in March when the stock markets took a slight downturn, the cryptocurrency’s price index lost 40% of its value in a matter of hours. Many predicted that the cryptocurrency’s price index follows the markets above and beyond their own price fluctuations and that it was just a volatile asset like them.
However, that is not the case as analysts have pointed out that Bitcoin doesn’t entirely correlate with the stocks based on its historical data. Yes, there are times when the price index follows the same pattern but that is too far and beyond. The recent month’s market activity proves this point as the conventional markets kept going down while Bitcoin kept going up. The cryptocurrency is now up 35% in a matter of one month while the stocks have dived around 3% overall in anticipation of the crucial November 3 election.
But, at the same time, the uncertainty around the electoral process’s integrity means that Bitcoin may yet feel some backlash from investors as they scramble for safe havens ahead of the election. Plus, this time around, the election results are expected to get delayed because of a massive increase in mail-in ballots and that can make the counting process go on for a long time. So, it won’t necessary be like the winner is announced on November 3 evening, rather the process may take up to a month to be decided and may even be appealed in the Supreme Court. The longer the election drama plays out, the more pressure the stocks will face.
According to the analysts from BofA led by Michelle Meyer:
Landslide victory for either Trump or Biden and rapid election conclusion would likely be welcomed by markets while a severely contested election could see risk-off and drive 10-year rates materially lower.”
But, when it comes to Bitcoin, it remains to be seen how they will respond. If the investors are already looking at Bitcoin as an alternative safe haven, then its price index may remain stable or even increase its worth during the vote counting process. However, altcoins are already at their lowest prices in relation to Bitcoin itself and they might continue this losing streak during the heavily contested process.
Image source: SimpleFX
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