Bitcoin’s surge during US election week has pulled cryptocurrency performance further ahead of major asset classes this year.
The Bloomberg Galaxy Crypto Index of digital currencies, including bitcoin, is up about 120% in 2020, exceeding gold’s near 30% jump. The crypto index has rallied some 11% during a three-day streak since election day in the US, a period when the dollar fell to a 2018 low.
Crypto believers say an escalating pandemic and sliding US dollar amid ever looser monetary policy will spur more gains as investors seek stores of value. Sceptics argue crypto markets have a history of wild swings and are merely riding a tide of liquidity.
Democratic nominee Joe Biden appears on the verge of claiming the presidency from Donald Trump, who has questioned the credibility of the election.
A tight senate race could leave the chamber in Republican control, setting up a divided government that diminishes the odds of huge fiscal stimulus and heaps pressure on the Federal Reserve to loosen monetary policy even more.
“Gold, silver and bitcoin have worked like a dream in the weak US dollar environment and has attracted huge client interest,” Chris Weston, head of research with Pepperstone Group, wrote in a note to clients. Further substantial dollar weakness would encourage “an even more constructive view” on gold and bitcoin, according to Weston.
Bitcoin breached US$15 000 this week and climbed 2.1% as of 2pm in Tokyo. The Bloomberg Galaxy Crypto Index advanced 3.1%. — Reported by Eric Lam, (c) 2020 Bloomberg LP