Analyst Reveals Why Georgia's January Election Is Crucial for Bitcoin
A Democrat victory in Georgia’s upcoming senate election could create the perfect conditions for an extended Bitcoin bull run.
Key Takeaways
- Monetary easing measures are virtually guaranteed from either U.S. political party.
- A Democrat senate will introduce a much larger stimulus package, inflating the dollar.
- The Georgia Senate election on Jan. 5 will dictate who controls the Senate.
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Though citizens are in day three of the U.S. elections, those holding Bitcoin may need to wait a little longer before a stimulus-driven bull run can continue.
More Free Money, No Matter What
The Federal Reserve met on Nov. 5 to discuss whether the U.S. economy needs another dose of quantitative easing, a policy whereby the central bank buys bonds or assets.
This stimulates economic activity but also increases the supply of the greenback, typically causing inflation in the long run.
Economist and well-known Bitcoin trader Alex Krüger spoke with Crypto Briefing about the ramifications of such a stimulus package, which he considers very likely.
“Both the Fed and the ECB are likely to provide further easing in December, while a large fiscal package would pass in the U.S. in January at the latest. These are all quasi guaranteed,” says Krüger.
The inflation that results from monetary easing can lead people to invest in Bitcoin as a hedge, and the financial stimulus may provide more disposable income for retail investors to spend on Bitcoin.
That’s why Bitcoin dipped back in October when Donald Trump criticized the Fed’s suggestion to introduce more financial stimulus.
Senate Majority Leader Mitch McConnell made comments earlier today suggesting that Congress will approve a smaller stimulus package than the one seen in March. However, McConnell may not be Majority Leader for long.
The January Election to Impact Bitcoin
The markets are expecting quantitative easing, no matter the president.
What will create more uncertainty, Krüger says, is the outcome of Georgia’s runoff Senate elections in January. As of Friday, there are no clear winners in either of the two Senate races unfolding in Georgia, and the solution is a second round of voting known as a runoff election.
The Republican and Democrat parties each currently control 48 senate seats, with 51 required to form a Senate majority. With not one, but two seats undecided in Georgia, the balance of power may shift following the January election.
“If Democrats get control of the Senate, the bullish Bitcoin scenario would receive a strong boost, as one should then expect considerably more fiscal largesse in the U.S. for the next following four years, leading to a much weaker dollar,” explains Krüger. “This should be decided on Jan. 5 in the Georgia Senate election runoff.”
While Democrat candidate Joe Biden looks set to win the U.S. presidency, the fate of the American economy lays in the hands of the Senate. Whether the Senate’s decisions will help or hinder Bitcoin’s bull run is still up in the air, with all eyes now on the election on Jan. 5 2021.
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