As Bitcoin, the leading cryptocurrency, continues to decline, analysts suggest that the possibility of President Joe Biden of the United States giving up on re-election could also be unfavorable for the market. Bloomberg reported on Thursday that “Bitcoin is falling due to Biden Drama and the risk of the German government selling off.”
Bitcoin has been on a downward trend for three consecutive days, nearing the levels seen last February. The downslide is presumably caused by the US political situation and the German government shifting their coins to exchanges.
Bloomberg noted that Investors worldwide are contemplating a scenario where 81-year-old Biden succumbs to demands to give up on re-election. In particular, Richard Galvin, co-founder of hedge fund Digital Asset Capital Management, stated there is a possibility that a stronger Democratic candidate who is less friendly to cryptocurrency could replace Biden.
Such a candidate replacement could also imply the difficulty of electing a Republican candidate, Donald Trump, who is pro-cryptocurrency. Trump had promised to be a “crypto president” at a fundraising event in San Francisco last month, pledging active support for the cryptocurrency industry.
In contrast, cryptocurrency investors evaluate that the Biden administration has been overregulating the industry. Last December, Forbes reported that the market expects Trump to overturn hostile cryptocurrency policies if he returns to power.
However, Matt Hogan, Chief Investment Officer of Bitwise Asset Management, suggested the exact opposite possibility. He stated, “The potential replacement of the Democratic presidential candidate is likely to unfold a more favorable situation for the cryptocurrency market.”
He explained that the government’s attitude towards digital assets has improved over the past year. Bloomberg also pointed out that the bad news from Germany and Japan was another factor in Bitcoin’s decline. The analysis is that if the German and Japanese governments dispose of cryptocurrencies seized in criminal cases, the market would have an excessive supply.
In fact, according to blockchain analysis company Arkam Intelligence, about $75 million worth of coins were transferred from a wallet associated with the German government to an exchange on that day. In Japan, the Bitcoin refund from the bankrupt Japanese cryptocurrency exchange Mt. Gox in 2014 is attracting attention. Galvin explained that the potential for short-term weakness in Bitcoin’s value could be attributed mainly to the expected release of about 140,000 Bitcoins to Mt. Gox creditors, who might sell them in the market. He emphasized that this, combined with selling pressure from the government, constitutes a significant reason for the cryptocurrency’s recent instability.
On that day, the price of one Bitcoin fluctuated between $58,000 and $56,000, falling to $56,000 at one point, marking its lowest level in over two months.
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