TMCnet Feature
October 15, 2020

Investing in Bitcoin Favorable Amid Risky Stock Market

Investors all around the world have been skeptical about investing in the stocks, as the global stock market has been extremely volatile throughout the year 2020. The US stock market suffered a huge blow due to the COVID-19 crisis. The financial markets crashed as the share prices of major companies in the US saw a steep downward trend, causing distress among the investors.

Stock Market’s Performance

The US Stock Market has faced several challenges during this year. The COVID-19 crisis negatively affected the general market and therefore the stock prices fell. The S&P 500 Index, after reaching  a yearly high of 3386p during February 2020, fell to approximately 2237p, the lowest since 2016. The NYSE also fell down to roughly 9000p in March 2020, first time after falling to the same threshold back in 2013. Currently, after showing signs of improvement, the stock market is expected to underperform again, as the World Health Organization has pointed towards the second global wave of the coronavirus. The lockdowns will disturb the economic activity and hence cause the financial markets to suffer again. Apart from the coronavirus, the US is also expected to face turbulence in the markets as the US Presidential Elections approach. Since 1960, the median move by the S&P 500 was a fall of -0.14% in the days of Presidential Elections, according to Dow Jones Market Data.

US Presidential Election’s Impact on The Stock Market

Investors in the US will be anxiously awaiting the first debate between President Donald Trump and Democratic challenger Joe Biden. Investors are beginning to get all-panicky in anticipation of the 2020 presidential elections and about the race for the White House and what that presidential contest means for the financial markets in the US, which are already volatile and uncertain. However, it is not any particular individual or political party that they are concerned with but the financial policies and reforms is what worries investors the most.
Analysts view the prospect of a second-term for Trump as a positive for stocks, however, sources and internet based polls reveal the general public’s inclination towards Biden.
Biden has been seen as more likely to press for increased regulations on certain sectors and industries, including banks, energy and health care, and an increase in taxes on corporations and high-income individuals. You can also get news about stock market and bitcoin investing directing from trusted source here on BitQT
The investors have therefore been skeptical of investing in stocks and may be inclined towards other investment opportunities. Billionaire investor and Galaxy Digital CEO Michael Novogratz, in Wednesday’s episode of CNN’s Markets Now show, explained how it could be a dangerous time for the investors to invest in the stock market. Although there has been an improvement in the S&P 500 index, Novogratz identified this as a short-term improvement, and warned how the stock market may crash as the US Presidential Elections approach. Instead, the billionaire investor advised investing in commodities such as gold or in bitcoin, the leading global cryptocurrency. The investor also identified the correlation between the S&P 500 Index performance and the bitcoins price performance as short term correlation.

Bitcoin’s Performance

BTC has dominated the entire crypto-economy, as the measuring metric of the bitcoin’s market capitalization as compared with the estimates of the rest of the crypto market economy is over 58%. Although BTC prices fell earlier this year to a low of $4,945, according to the Coindesk Bitcoin Price Index, there has been a positive trend in its price index ever since. The bitcoin price continues to rise and currently stands at approximately $10,750. Contrary to the stock market expectations, the BTC is expected to improve its value during the phase of elections, as a greater number of firms and individual investors have diversified their investment portfolios with an inclusion of the bitcoins. Successful multi-billion dollar companies, such as Microstrategy, have begun long-term investments in bitcoins as expert analysts expect bitcoin’s price to increase to “$50,000, 5X from here” in two years.

Final Analysis
The wobbling stock market has alerted the investors throughout the world, and caused them to explore other channels of investment. Of these channels, currently gold has also been seen as a profitable commodity to invest in as there has been a worldwide surge in gold prices, and it is a universally recognized and tradable commodity. However, analysts and investors have begun identifying bitcoin as a securer and profitable investment in the future, as bitcoins provide the investors a tax-free, decentralized platform to invest, which is immune to economic and political reasons. Also, the current and upcoming generations are more bent towards digital currencies, hence why it is expected that bitcoin will overthrow gold in the future and become the new safe haven for investors all around the world.

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