Political developments have triggered substantial investments in the digital asset market, with Bitcoin benefiting the most, attracting $419 million in investments.
Ahead of the November 5, 2024, Election Day, the potential Donald Trump administration has pledged to keep the US dollar strong, adhering to the nation’s established economic policies. Scott Bessent, Trump’s chief economic advisor, shared this commitment with the Financial Times on Sunday, easing concerns about a weaker dollar under Trump’s leadership.
As the election draws near, prediction markets like Polymarket show Democrat Kamala Harris lagging behind Republican Donald Trump, who favors cryptocurrency. Earlier this year, Trump and his running mate, JD Vance, advocated for a weaker dollar to boost manufacturing growth. This position sparked worries among investors and economists about the possible decline of the US currency.
However, Bessent clarified that he does not expect Trump to reduce the USD value intentionally. He highlighted the dollar’s status as a “reserve currency” and indicated that Trump would maintain its strength. While devaluation usually means lowering the currency’s exchange rate to make exports more competitive, Bessent dismissed this strategy for the upcoming administration.
Bessent Defends 20% Import Tariffs
Bessent is rumored to be a top contender for the Treasury Secretary role under Trump, highlighting his significant influence in crafting the administration’s economic strategies. He also supported Trump’s proposal to introduce inflationary tariffs of up to 20% on all imports, indicating that these “extreme positions” could be softened in discussions with trade partners.
“The reserve currency can go up and down based on the market. I believe that if you have good economic policies, you’re naturally going to have a strong dollar,” Bessent remarked. Additionally, he clarified that his statements do not reflect Trump’s official stance, yet they suggest a continuation of policies that support a strong dollar.
Trump’s recent praise of Bessent as “one of the most brilliant men on Wall Street” shows the economic advisor’s significant influence on the administration’s financial strategies.
During the interview, Bessent praised Trump as a businessman who comprehends economic intricacies, contrasting him with Kamala Harris, whom he labeled “an economic illiterate,” and her running mate, Tim Walz, as “twice as illiterate”. These remarks underscore the sharp political and economic contrasts between the candidates.
Election Influence on Digital Assets Surge
Political developments have triggered substantial investments in the digital asset market. Digital asset investment products rose by $407 million, primarily driven by the upcoming elections rather than traditional monetary policies, according to CoinShares weekly report on October 14.
Bitcoin benefited the most from these political changes, attracting $419 million in investments. In contrast, short-Bitcoin products saw outflows of $6.3 million. Meanwhile, multi-asset investment products continued their 17-week streak of inflows, though modestly at $1.5 million. At the same time, Ethereum experienced outflows totaling US$9.8 million.
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