The Impact of U.S. Elections on Our Crypto Portfolios

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Greetings, diamond hands!

Tomorrow is the big day when the crypto market's direction is decided, at least for the short term. I am, of course, referring to the US presidential elections, where citizens will choose who will run their country for the next four years.

Because of that the current market sentiment is extremely nervous and many investors are probably rearranging their positions while trying to minimize the effect on their portfolio. In the vast crypto space, the consensus is that the possible victory of Donald Trump is seen as a far more bullish case for crypto than if Kamala Harris should win.

Currently, the popular Polymarket forecast puts Trump ahead of Harris although Polymarket is widely considered to be a bit too optimistic about Trump's odds and reality, the race will be more even.

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Market

So what does either outcome mean for Bitcoin and especially, for the long-awaited altcoin season?

For the past couple of days, I've read and listened to all sorts of theories and predictions. One analyst said it will be +/- 10% either way meaning +10 if Trump wins and -10% BTC price decline if Harris wins. You can probably imagine what -10% would mean for alt prices...

Also, another analyst whose YouTube video I was just watching was actually really scared of the impact that Harris' win would have on altcoins: Gary Gensler would stay and continue what he knows best, pressure on defi coins, and other harm in the future.

I don't believe in the end of the world, or the end of crypto scenarios one bit. I believe there will be a lot of volatility in the days ahead but it'll remain short-term and we are still riding on the bull train. A possible Harris win would be a shock but all in all, it's just a single event and the market will recover.

Here's an interesting picture of S&P 500 performance throughout each presidency since the sixties. As you can see, there's hardly any visible drop between Obama, Trump, and Biden terms when there's been a new president elected.

Darrow Wealth

Of course, this is SPX but all things considered, I just can't see negative longer-term effects being caused by a possible Harris win. Besides, since stocks have done well during Democrat presidencies, perhaps Harris' win would be bullish in the long run if she would ease up a bit and choose a less hawkish approach.

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Preparing For Short-Term Bloodbath

I think it goes without saying that now is probably not the best time to be in either short- or long positions because that's like tossing a coin with a ~50% chance of it going either way. A Trump win could even send BTC to new all-time highs quickly liquidating short positions and if he wins, the investors who have now moved to stable positions would then re-enter their altcoins and this would possibly liquidate alt shorts as well.

As a swing spot -trader I have been thinking a lot about how to best prepare for the election day.

I have already exited a couple of weak alts and moved to stables but I'm still heavily exposed to quite a many altcoins. This means my portfolio would take some serious damage in case Harris is elected and the worst-case (BTC) scenario plays out.

I'm also holding some Bitcoin which could actually prove to be a solid option in this case. If Bitcoin price would indeed drop something like 5-10% it wouldn't be that bad as we could rotate to alts that have suffered way more. Also, in a bullish scenario BTC would then obviously make more gains which stables wouldn't do. Not a win-win but a solid hedge where we minimize losses and secure possible gains.

Overall my feelings are surprisingly relaxed. Even a total alt bloodbath would be temporary. In my mind, I always relate these big drops to impermanent loss which is a term used in defi when a token pair is imbalanced. So basically there is no loss if you don't make a move when it's down. Perhaps it's not the best comparison but you know, as time goes by...

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Bitcoin Dominating

Everything has a top and when it is reached, it's time for a reversal. In my opinion, the most interesting chart to keep an eye out for is the Bitcoin Dominance chart displaying BTC performance against altcoins.

Trading View

It has now been climbing up quite steadily throughout the year and is now standing at 60.35%. Based on previous cycles' alt seasons, it's estimated that Bitcoin Dominance is close to its top and once this happens, it should ignite the highly anticipated alt season. Many analysts are placing the top around 63% so we are very close even though that is slightly relative because it could mean something like a couple of months.

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Conclusion

One thing is for sure. If I wasn't so into trading and other crypto hustle, I would close the lid of my laptop for at least this week, maybe even for a few months, and start a new hobby. Like painting for example.

However, even though these mega-crypto events can be a little terrifying, they do offer some great opportunities. This one is a bit trickier since it is so clearly a 50/50 up or down. There's no way to completely secure positions for both possible outcomes.

Part of me would like to move even more assets to stables but that's not really why we are in this game, is it? I think the best we can do is to keep zooming out, do some damage control, and remember that the BTC.D chart will top in the near future.

Thank you for reading and God bless America.

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Let's connect:

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DISCLAIMERS:

• This is NOT financial advice.
• Thumbnail image created with Canva, other pic sources: Polymarket, Darrow Wealth, Trading View

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Posted Using InLeo Alpha