According to JPMorgan analysts, the victory of the Republican candidate for US president Donald Trump may further fuel the price dynamics of Bitcoin (BTC).

Retail Investors Turn to Bitcoin for ‘Devalue Trading’

In recent customer noteJPMorgan analysts have suggested that Trump’s victory could provide “additional upside” for both BTC and gold as retail investors increasingly view Bitcoin as a “depreciation trade.”

Simply put, devaluation trading is a strategy to protect purchasing power from the continued erosion of fiat currencies due to intensive money printing.

It is worth noting that the M2 money supply – a measure of total money in circulation – has increased dramatically during the coronavirus pandemic. The excess money supply led to increased inflation, forcing the US Federal Reserve (Fed) to raise interest rates to stop it.

When purchasing BTC, retail investors seek to maintain the value of their money, hoping that Bitcoin will act as a hedge against currency depreciation. JPMorgan’s note reads:

Retail investors appear to be embracing the “devaluation trade” even more strongly by purchasing bitcoin and gold ETFs. The retail momentum is also evident in memes and AI tokens, which have outperformed in market capitalization.

Data from SoSoValue can be seen that Bitcoin exchange-traded funds (ETFs) have attracted as much as $1.3 billion in inflows over the past two days. As of October 30, cumulative net inflows into US spot BTC ETFs were $24.18 billion.

October’s total ETF inflows alone were $4.4 billion, marking the third-largest month of BTC ETF inflows since their launch earlier this year.

However, institutional investors appear to have slowed down on BTC futures activity recently, with analysts noting that Bitcoin futures have entered overbought territory, potentially creating vulnerability for BTC’s near-term prospects.

The client note emphasized that credit and forecasting markets are leaning toward a Trump victory, while equity, currency and interest rate markets are not. Analysts summarize:

Overall, to the extent that a Trump victory inspires retail investors not only to purchase risky assets but also to further adopt “value-depressing trading,” additional increases in bitcoin and gold prices could emerge in a Trump win scenario.

Where is BTC heading? Analysts share their forecasts

Bitcoin prices are within 2% of reaching a modern all-time high (ATH), which is causing renewed optimism among cryptocurrency analysts.

For example, most recently cryptocurrency analyst Timothy Peterson he founded that BTC could go up to $100,000 by February 2025.

Meanwhile, crypto options trading data indicates that investors are confident that BTC will reach $80,000 by the end of November 2024, regardless of the election result.

Experienced trader Peter Brandt, however, urged caution, advising BTC bulls with a daily close above $76,000 is crucial to confirming a true breakout. At the time of writing, BTC is trading at $71,798, down 0.1% over the last 24 hours.

Featured image from Unsplash, charts from FRED and Tradingview.com