Amid the ongoing global turmoil, Bitcoin’s role as a hedge against geopolitical concerns is under scrutiny. Kendrick, in his recent analysis, highlights that unlike traditional safe-haven assets like gold, Bitcoin has failed to offer the same protective shelter during times of political unrest. However, the cryptocurrency has found a unique place as a hedge against systemic financial risks, such as the collapse of banks and the unsustainability of US Treasuries.
Bitcoin – A Hedge Against Financial, Not Geopolitical, Risks
Bitcoin’s performance in times of crisis has consistently mirrored that of equities, rather than gold, according to Kendrick. As market volatility spikes in response to events such as the ongoing Middle East conflict, Bitcoin’s price has struggled to maintain stability. In contrast, gold continues to shine as a reliable store of value, with investors flocking to it in times of geopolitical uncertainty.
Kendrick refers to a May report by Standard Chartered that draws an important distinction: Bitcoin behaves more like an extension of the tech sector. This means that, during periods of financial instability—such as bank collapses or fears over US Treasury sustainability—Bitcoin shines as a hedge. The collapse of Silicon Valley Bank in March serves as a case in point, with Bitcoin performing strongly in the aftermath, as concerns about the broader financial system mounted.
Yet, when it comes to political risks, Bitcoin remains far from replacing gold’s role as the go-to safe haven.
US Presidential Election Could Change Bitcoin’s Trajectory
Kendrick’s analysis dives into another interesting factor influencing Bitcoin’s future: the upcoming US presidential election. According to Polymarket data, Donald Trump’s odds for the 2024 election have increased by 1%, while Vice President Kamala Harris saw a corresponding decline. This shift has made the race nearly even, with a 50/50 chance for either side.
Kendrick notes an intriguing market dynamic at play—while geopolitical tensions depress Bitcoin prices, an uptick in Trump’s election prospects seems to bolster its future potential. This could be attributed to Trump’s favorable stance toward the crypto industry during his previous presidency, which led to a more bullish outlook for Bitcoin in the event of a Republican win.
Bitcoin Options Surge Ahead of Year-End
In a sign of growing optimism, Kendrick pointed to a surge in Bitcoin options activity on the crypto derivatives exchange Deribit. Specifically, open interest for options with a strike price of $80,000, expiring on December 27, surged by 1,300 BTC in the last two days. This suggests that investors are positioning for a potential recovery in Bitcoin prices before the year’s end, despite short-term setbacks.
Also Read: IMF Urges El Salvador To Tighten Bitcoin Regulations As Country Holds $345M In BTC
Kendrick advises that the current dip below $60,000 could present a buying opportunity for those betting on a medium-term rebound. The interplay of geopolitical risks, financial instability, and shifting election odds will likely keep Bitcoin volatile in the coming weeks. However, the surge in options activity suggests that many investors are preparing for Bitcoin to reclaim its upward momentum as 2024 approaches.
While Bitcoin has yet to prove itself as a safe-haven asset in times of political turmoil, its role as a hedge against financial risks is becoming more pronounced. As the US election heats up, Bitcoin’s price could see further fluctuations. Investors are keeping a close eye on both global tensions and Trump’s electoral odds, as either event could significantly impact Bitcoin’s future. With options activity on the rise and potential for a recovery looming, the end of the year promises to be a crucial period for the cryptocurrency.
Disclaimer: The information in this article is for general purposes only and does not constitute financial advice. The author’s views are personal and may not reflect the views of Chain Affairs. Before making any investment decisions, you should always conduct your own research. Chain Affairs is not responsible for any financial losses.
About The Author
