First Mover: Stimulus Winning as Biden Surges in Polls and Bitcoin Eyes $12K

The outcome of next month’s U.S. presidential election may not matter much for bitcoin’s price: Economic stimulus in the trillions of dollars is likely no matter who wins, bolstering the largest cryptocurrency’s appeal as a hedge against inflation. 

President Donald Trump over the past week has reversed his opposition to a new government-spending bill following April’s $2 trillion coronavirus-aid package. He signaled his eagerness to strike a deal with leaders of the opposition Democratic party, who have proposed a $2.2 trillion stimulus bill. According to Axios, he told senior lawmakers in his own Republican party that he wants “a big deal.” 

If Trump wins in November, he’s likely to continue supporting stimulus spending or easy monetary policy from the Federal Reserve, given his four-year track record of jawboning the U.S. central bank to cut interest rates whenever signs of weakness appear, while boasting about U.S. jobs growth and stock-market increases. He also could push for a new round of tax cuts. 

Trump’s Democratic challenger, former Vice President Joe Biden, has already rolled out his own $5.4 trillion agenda that includes increased budget allocations for education, housing, health care, paid leave and fixing crumbling infrastructure, according to the Wall Street Journal. The Biden campaign has pledged to cancel a substantial portion of Americans’ $1.5 trillion in federal student debt.  

Such expenses would come on top of what already seems like an unending sea of red ink: The U.S. government’s budget deficit for the 2020 fiscal year tripled to $3.1 trillion. And economists say the Federal Reserve is likely to keep printing money in coming years to help finance the budget gap. 

“Because the economy’s hands are tied and policymakers’ hands are tied, the wiggle room that any party in power is going to have is limited,” said Chris Wallis, chief investment officer of Vaughan Nelson Investment Management, a division of the French financial firm Natixis, told First Mover in a Zoom interview. “There’s no atheists in a foxhole. Nobody is going to worry about deficits.”

Wall Street analysts have debated in recent weeks whether a Trump or Biden victory would be better for stocks. What’s good for bitcoin might be easier to pinpoint, since most digital-asset market analysts say the Federal Reserve’s $3 trillion of freshly printed money this year has helped to push up prices for the largest cryptocurrency. 

The upshot? For voters, it’s a choice between Trump and Biden. But bitcoin might be a winner either way.   

Read More: Bitcoiners Have Trillions and Trillions of Reasons to Ignore US Election

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Chart showing year-over-year change in global central bank balance sheets (blue line) and money supply (red line).
Source: Deutsche Bank

Bitcoin Watch

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Bitcoin daily chart showing six-day winning streak.
Source: TradingView

Bitcoin bulls are taking a breather, having powered gains for the sixth consecutive day on Monday. That’s the longest daily winning run since August 2019.

The momentum is likely to continue as the growing institutional participation highlighted by the payment company Square’s recent $50 million investment in bitcoin has bolstered investor confidence in the cryptocurrency’s long-term prospects.

Technical charts have turned bullish with the cryptocurrency’s convincing move above the Sept. 18 high of $11,200.

Last, open interest in futures listed on major exchanges across the globe has increased by 20% alongside a rally in prices. Futures trading volume also doubled to $14 billion on Monday.

A rise in open interest and volumes alongside an increase in prices is said to validate the uptrend. In other words, the latest bullish move has legs.

“The probability of bitcoin rising to $14,000 from current levels is stronger than the odds of a decline to $10,500,” Patrick Heusser, a senior cryptocurrency trader at Zurich-based Crypto Broker AG told CoinDesk in a Twitter chat.

Read More: Bitcoin Eyes $12K After 6-Day Streak of Gains

Token Watch

Ether (ETH): Cryptocurrency rallies after Grayscale (owned by CoinDesk parent Digital Currency Group) announces that Ethereum Trust has become SEC reporting company.  

Zcash (ZEC): Token’s developer, Electric Coin Company, shifts to non-profit status following stockholder vote.

Dai (DAI): MakerDAO’s gambit to restore DeFi stablecoin’s value to $1 peg appears to have worked

Ethereum Classic (ETC): Developers on frequently-targeted blockchain attempts “modified exponential subjective scoring” as latest solution for warding off 51% attacks.  

Filecoin (FIL): Trading in decentralized file-storage service’s tokens begins on Kraken Oct. 15, exchange says.  

What’s Hot

Coinbase announces customers can now use government-issued cash to buy cryptocurrencies directly from within their wallets (CoinDesk)

Former CFTC Chair Giancarlo’s Digital Dollar Project proposes scenarios for testing a central bank digital currency, all of which involve distribution “through the existing two-tier banking system and regulated intermediaries” (CoinDesk)

International financial authorities and 20 of the world’s largest economies are establishing official standards for regulating and issuing sovereign digital currencies (CoinDesk)

Analogs

The latest on the economy and traditional finance

Harvard research paper co-authored by former Treasury Secretary Larry Summers estimates that costs of lingering health effects could double economic toll of coronavirus over next decade to $16T (Journal of the American Medical Association) 
Chinese exports rose for the fourth straight month in September while imports also rose sharply, signaling robust bounce-back from Covid crunch (Bloomberg)

India has “weak economic outlook,” Scotiabank says (CNBC)

German finance minister Scholz reckons EU economy can recover by 2022 if European leaders work together (CNBC)

Financial and tech stocks buoyed the Australian share market on Tuesday netting 7-day winning streak on signs of economic recovery (Reuters)

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