Bitcoin price has suffered a harsh reversal in the past few days as investors focus on the upcoming US election that could have big implications for the crypto industry.
It is still unclear who will win the election, although Polymarket traders expect Donald Trump to be the winner. However, Polymarket is a fairly new platform, and it is unclear how accurate it will be in this season.
We believe that Bitcoin and other cryptocurrencies will have an initial pop if Trump wins the electoral college. In the long term, however, the election will be just an event, and Bitcoin will likely continue doing well.
Still, some of Trump’s policies could have a lasting impact on Bitcoin. Some of these key policies to watch will be:
Tax cuts and tariffs
The biggest part of Donald Trump’s economic policy is on tariffs and tax cuts. He has advocated renewing his tax cuts when they expire and going further by implementing more tax cuts. Trump has also argued that cutting taxes can be compensated by tariffs.
These policies will likely lead to more public debt in the US. Data shows that the US public debt has jumped to $35.97 trillion, meaning that it will cross the $36 trillion this month.
A study by the Congressional Budget Office (CBO) estimated that Trump’s policies would lead to a $7.5 trillion budget deficit over a decade.
Therefore, there is a likelihood that the US debt will be downgraded, making it hard for the government to sell more of it. That will lead to more cash printing by the Federal Reserve, which will push the greenback lower.
One of the top cases for Bitcoin is that it has a fixed supply, meaning that it cannot be manipulated. Also, many people buy it because it is a hedge against the soaring US public debt.
Read more: XRP Price Prediction: Ripple Could Crash by 25% After Election
Federal Reserve independence
Donald Trump has also proposed having more say about what the Federal Reserve does. While doing that will be hard, he may still have his way, especially by appointing a Fed Chair who believes in his policies.
The challenge, however, is that having a Fed that is not independent will lead to a weaker US dollar, and higher gold and Bitcoin prices. One of the best examples of this is the Turkish lira, which has plunged to a record low because President Erdogan has ended the central bank’s independence.
Read more: Bitcoin Price Prediction: Will BTC Recover Ahead of US Election?
Deregulation
The other action that could push Bitcoin prices higher, albeit in the short term, is the pledge to deregulate key industries.
He has vowed to fire Gary Gensler on the first day, an expected move since presidents often replace the heads of key departments. He has also promised to implement crypto-friendly policies. Therefore, his victory will likely lead to more inflows in Bitcoin ETFs as investors anticipate better policies.
However, in the long-term tougher regulations will be positive for the industry as they will prevent unscrupulous scams.
