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In summary
- Gold and Bitcoin are rising and are expected to continue seeing gains in the coming weeks due to geopolitical uncertainty, concerns about the strength of the dollar and the upcoming US election, according to analysts at JP Morgan.
- A “debasement trade” could boost demand for gold and Bitcoin, especially if Donald Trump wins the US presidential election.
- Trump, who used to be anti-crypto, is now pro-industry and has proposed policies that could increase inflation and geopolitical tensions.
Gold is going up, and so is Bitcoin. And both are set to continue seeing gains in the coming weeks thanks to geopolitical uncertainty, concerns about the strength of the dollar and the upcoming US election, according to analysts at JP Morgan.
In a report on Thursday, the bank’s analysts said a “devaluation trade” is looming that could further boost demand for both gold and Bitcoin and help drive prices higher. A victory by Donald Trump in the US presidential election next week increases the likelihood of such a trade, according to analysts at JP Morgan.
A “downgrade trade” is when traders try to hedge against weakened currencies, geopolitical winds, and government deficits. Gold is often a good insurance policy against weakened fiat money; Leading asset manager BlackRock is also touting Bitcoin, known as digital gold, as another asset to invest in during uncertain times.
“Rising geopolitical tensions and the upcoming US election are likely to reinforce what some investors call the ‘debasement trade,’ favoring both gold and Bitcoin,” the report noted.
Not only has Republican candidate Donald Trump presented himself as the pro-Cryptocurrency candidate in the race, but his policy of raising tariffs could lead to more inflation and geopolitical tensions, the report noted.
Former President Donald Trump used to be anti-crypto, but this year he has come out fiercely in favor of the industry.
The real estate mogul said he wants all Bitcoin that is to be mined in the future to be mined in the US and also launched a decentralized finance (DeFi) project that runs on Ethereum and plans to launch his own stablecoin, as Decrypt previously reported.
Gold has hit new highs this year and Bitcoin is now just 5% away from touching its March all-time high. The largest digital currency is trading at $70,114, according to CoinGecko data, after nearly hitting a new all-time high on Tuesday.
Disclaimer
The opinions expressed by the author are for informational purposes only and do not constitute financial, investment or other advice.
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