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Joe Biden’s victory had little impact on Bitcoin

Cryptocurrency

Since the election in the United States, Bitcoin and the rest of the cryptocurrency market have been very successful. Last week Bitcoin broke its historic record in market capitalization, leading many to predict that, before the end of the year, it could reach the $ 20,000 mark.

The implications of a Biden administration in the cryptocurrency markets are unclear so far. Biden has so far not taken public policy positions on cryptocurrencies, but was considered by some to be partially involved in the inspiration for encryption and cryptography.

In the 1990s, Biden was chairman of the judiciary committee and introduced two encrypted bills. Some argue that this led to the inspiration for encrypted messages, a supposedly important precursor to DLT and blockchain technology.

It appears that Biden recently softened his position on cryptography, arguing that the privacy of consumer data is an important issue. Without encryption, it is difficult to see how Internet users can protect their data from malicious third parties and social media.

Here are 5 reasons why Biden’s victory had little impact on the recent price action in the cryptocurrency market:

No political positions

Biden made few notable mentions about Bitcoin, or cryptocurrency in general, in his presidential race. Of course, there are more pressing issues at the top of the political agenda in the midst of a pandemic and an unstable economic outlook: in its current course, the United States is in serious danger of losing any kind of competitive advantage it may have in the crypto space.

Ripple announced that it will relocate its headquarters due to a hostile regulatory environment in the U.S., while the SEC is still up in arms against cryptocurrencies, repeatedly blocking encrypted ETF product proposals, dismantling TON’s efforts to Telegram, delaying the Facebook Libra project and refusing to classify crypto tokens as a separate asset class.

It will be interesting to see whether the US will continue on this path of ignoring and disrupting the crypto space over the next four years, or whether “smart money” from institutional investors will be able to bend Biden’s ear and help create a more friendly environment.

Halving in May

Market cycles are essential to understand the spikes and lows in cryptocurrency prices. O halving of Bitcoin in May, which cut miners’ premiums in half, is arguably a much more powerful precursor to the recent price hike than elections in the United States.

It is not clear whether Satoshi Nakamoto deliberately planned for halvings to take place in election years, but the fact that it does makes it more difficult to assess the impact of the US election on market fluctuations.

Some sources suggested that the huge crash we saw in March was due to a sale of miners on the Bitcoin network, and not due to the market panic caused by the introduction of anti-covid measures.

The theory states that, before halving, miners knew they would have to sell when the price was still relatively high (about $ 9,000 – $ 10,000) before their reward fell.

Approves? Much of the Bitcoin that was sold was “new” Bitcoin, according to the blockchain analysis, so this excludes market liquidation, as they tend to contain older bitcoins.

PayPal support

The announcement that PayPal will offer full support for Bitcoin (and some other cryptocurrencies) next year was big news for the crypto industry in terms of adoption efforts.

The platform probably took the leap in part due to the growing confidence that the cryptocurrency is gaining year after year, and also due to PayPal’s difficulties, as the market leaves its business model behind; Apple and Google Pay are services that are likely to drive customers away from the online payment platform.

However, cryptocurrency support can be a mutually beneficial arrangement, both for PayPal to expand its customer base and to lend legitimacy to the cryptocurrency for retail investors currently in doubt.

Institutional investment

The other factor that probably had a much more significant impact than Biden’s presidential victory is the integration of institutional investors.

Greyscale and Square increased their holdings by billions of dollars, in a move that caused a huge increase in the traditional investment market. There are several possible reasons for this, but first of all it is thanks to Bitcoin proving its ability to tackle the recent economic problems caused by the pandemic, as well as the Bitcoin market cycle approaching its next bullish cycle.

Institutional investors are very familiar with how market cycles work. They use the same buying and selling techniques in other markets. This may mean that they see Bitcoin as an excellent opportunity to sell their crypto assets at the right time to realize their profits after the recent accumulation phase.

The other reason that American investors may be entering the market is due to concerns about the Federal Reserve issuing more US dollars to pay for stimulus packages. This could have the consequence of the devaluation of the US dollar in the long run, which the purchase of an asset such as Bitcoin will allow investors to protect themselves from inflation and the return of their fiduciary assets.

Central Bank digital currencies are just around the corner

China, the Bahamas and many other countries are far ahead of the US in terms of CBDC – another reason the US may fear being left behind – the projects, however, lend legitimacy to the crypto from a banking and investment standpoint.

In recent years, banks have taken a closer look at the possible uses of blockchain and DLT, and their support could be the watershed to encourage widespread investments across the banking sector.

Disclaimer - OBN is an informational website which aims to give the latest blockchain related news to the readers. Articles on OBN should not be considered as investment advice. Trading cryptocurrencies is a high-risk investment, every user is advised to consult an expert before making any decisions.