Former Trump chief of staff Mick Mulvaney says a Joe Biden presidency would cause an “avalanche” of regulations. Some economists have also voiced concerns that the Biden administration would lead to a stock market pullback.
During an interview on CNBC’s Squawk Box, Mulvaney said Biden would push many regulations in a short period. He stated:
Data from Skew shows Bitcoin has seen more correlation with gold than stocks in recent months. Hence, an argument could be made that a slowing stock market could actually buoy Bitcoin’s sentiment.
The correlation between Bitcoin and gold. Source: Skew
But as seen from March to April, a bear market in stocks could lead the momentum of Bitcoin to dwindle.
According to the University of Maryland’s finance processor David Kass, increased tax rates under Biden would lead to lower profits. Over time, declining profits could cause share prices to drop, causing the stock market to slip. Kass said:
Other studies show that a Biden presidency might have minimal impact on the trend of the stock market.
The WSJ says historical data indicates the election of Biden could still allow the stock market to net an average 10% annual return. Ed Finn, an opinion contributor to the WSJ, wrote:
However, there are two possible scenarios, in which a drop in stocks is likely to impact Bitcoin as well.
First, if it causes the sentiment around safe-haven assets like gold to improve, it might raise the chances of a BTC rally.
Secondly, a slump in stocks could take gold and Bitcoin with it as it did in March. If the latter scenario plays out, most assets with the exception of U.S. Treasuries are likely to decline.
Since the sentiment around the Biden presidency remains mixed, there is a high probability that it would have no meaningful impact on BTC.
When Bitcoin enters 2021, it faces a post-halving cycle as it did in 2017. Back in 2016, it took around 17 months for BTC to achieve a new peak at $20,000. If BTC follows a similar cycle, that puts the fourth quarter of 2021 as the possible next peak for the world’s leading cryptocurrency.
In the short-term, strategists predict a sell-off after a Biden election. Boston College associate dean for strategy Aleksandar Tomic said: