Last night, current United States President Donald J. Trump faced off against former Vice President and challenger Joe Biden in the first of three debates. Data shows, that following each debate, things have turned bad for the stock market, which could, in turn, mean even worse for Bitcoin.
Here’s why the stock market tumbling due to debates demoralizing investors could also spell bad news for the leading cryptocurrency by market cap.
Why The Debate Could Have a Bearish Impact On Bitcoin
Last night, the two top Presidential candidates went head-to-head as the world looked on. The two didn’t do anything to ease the minds of citizens, nor investors.
A “rocky” road to the election is expected to impact Bitcoin and prevent a new all-time high just yet, and last night was a preview as to why.
Neither candidate expects a peaceful transition of power, and already there are questions over the validity of the vote-counting process due to mail-in ballots causing all kinds of issues and turmoil.
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The uncertainty hanging over political started spilling into markets last night. While the Democratic and Republican leaders debated, the stock market spiked, then the moment the debate ended tanked.
Bitcoin price followed, dropping back down to $10,750, where it currently is attempting to close above the key level ahead of tonight’s monthly close.
This early sign of downward sell pressure due to fear and doubt may just be the beginning of more downside in Bitcoin and the stock market.
BTCUSD Versus S&P 500 Post-Debate Correlation Chart | Source: TradingView
Presidential Showdown Results In Stock Markets Taking A Beating
As depicted in the chart above, the blue line representing the S&P 500 stock market index, began plummeting just as the debate came to a close. Bitcoin’s fall started shortly before that, as the higher risk asset class likely began to feel the pressure of the debate sooner.
The two assets are back trading as tightly correlated as ever, despite constant talk from crypto’s brightest minds expecting a decoupling of the crypto asset from traditional markets any day.
But data shows that post-debate, markets turn down due to the ongoing uncertainty over which candidate’s campaign will ultimately win.
According to Ryan Detrick, chief strategist at LPL Financial, the S&P 500 historically posted declines across 5-day, 10-day, and one-month periods following each debate. With only the first of three debates beginning last night, the stock market could be in for a bumpy ride ahead. And due to the ongoing correlation with Bitcoin, the high-risk cryptocurrency market could take another hit.
If it doesn’t, however, the decoupling analysts are calling for will finally come to fruition, and Bitcoin shining while stocks tank, could be just another catalyst that fuels the cryptocurrency’s next bull market – which could be here as soon as the election is over.
Featured image from Deposit Photos, Charts from TradingView