The surprising victory of Donald Trump the just concluded election has altered the narrative on the expected winners and losers after the election. Hillary Clinton obviously lost, the democratic establishment lost, the media lost, pundits, commentators, and pollsters lost big time. Interestingly, the emergence of President-elect Trump didn’t lead to a doomsday in stock contrary to expectations that equities will crash if Trump wins.
Of a truth, investors in the equities market panicked in the first few hours after news of Trump’s victory broke. For instance, the Dow Jones lost 3.8% in pre-market trading, NASDAQ was down almost 5%, and the S&P 500 declined by 3%. However, stocks quickly recovered and the Dow closed near record highs.
Victor Alagbe, an analyst at Stern Options opines that “stocks seem to be holding on quite well, at least for now, and the likelihood of a market crash has been postponed until Trump take over the reins of governance.” However, Bitcoin is on track to become the biggest winner from a Trump presidency. To start with, Bitcoin Surged about 4% to reach a new record high of $738.33 after news of Trump’s victory broke. This article explores some reasons why a Trump presidency will profit Bitcoin investors.
Bitcoin is an alternative asset
The first reason Bitcoin investors should prepare to see a surge in its value under a Trump presidency is its status as an alternative asset. An alternative asset is a non-traditional investment that tends to record an increase in value inversely to the stock market. Alternative assets make a good diversification play because they help investors to score gains when the stock market is recording losses.
The more interesting point to note about Bitcoin as an alternative asset is that it is potentially more valuable than other alternative assets such as gold and paintings. Bitcoin is divisible, it is a measure of wealth, and it is acceptable as a legal tender for the exchange of goods and services.
More so, the blockchain technology that backs Bitcoin is gradually coming to prominence. In fact, Aite Group reports that spending to adopt blockchain technology in the capital markets should grow by 52% CAGR to $400M by 2019.
Bitcoin is a decentralized currency
The second reason Bitcoin investors should prepare to see a surge in its value under a Trump presidency is its status as a decentralized currency. Bitcoin provide investors with an opportunity to diversify their portfolio away from traditional assets that are often influenced by government economic policies. It is no longer news that some of Trump’s economic policies might deviate from the trend that the markets been accustomed to in the last 8 years under a democratic administration.
The fact that Trump might champion protectionism during his administration means that the global economic landscape might suffer some massive changes. However, the changes in the global economic landscape will be mostly felt in the Forex markets. It is still too early for investors to know if the U.S dollar will be stronger or weaker when the global economic landscape changes. However, smart investors are already buying up Bitcoin in order to protect themselves from currency headwinds.