As the highly anticipated debate between Donald Trump and Kamala Harris approaches, uncertainty surrounding the event is causing ripples in both the stock and cryptocurrency markets, according to analysts at QCP Capital.
While the cryptocurrency market cap saw a modest 1.9% gain over the past day, major tokens like bitcoin and ether have experienced declines for the week, dropping 3% and 6%, respectively. The analysts attribute this to the broader market volatility, with the correlation between crypto and global stocks nearing a two-year high.
“Macroeconomic uncertainty is currently dominating the cryptocurrency market,” noted QCP Capital analysts, highlighting the 30-day correlation to the MSCI World Equity Index reaching 0.6, close to a two-year high.
The stock market also experienced fluctuations in early trading on Tuesday, with the S&P 500 giving up some early gains and slipping 0.42%. The Dow Jones Industrial Average faced even steeper losses, dropping 0.5%, or roughly 200 points.
QCP Capital’s derivatives desk reported significant activity, indicating investor anticipation of increased volatility around the debate. “We’ve seen substantial buying of bitcoin options set to expire on September 11, with 400 contracts at the $57,500 strike,” the analysts added. “This suggests expectations of a price move of more than 3.3% from the current spot around $56,800 by tomorrow’s expiry.”
The analysts believe that Harris’ comments will be scrutinized more closely than Trump’s, as market participants seek clearer insights into her economic policies. “The market will be watching closely for Kamala’s policy cues in her debut debate, especially in contrast to Trump’s clearer stance on lowering corporate taxes and raising tariffs, both of which are seen as inflationary,” they said.
While bitcoin is often considered the “Trump trade” due to his vocal support for crypto, QCP Capital analysts believe that a positive mention of crypto by Harris could surprise the market.
Despite the current volatility, QCP Capital maintains a “structurally bullish” outlook for the fourth quarter. They recommend investors focus on earning steady returns while positioning themselves to benefit from potential market gains. “We favor earning stable yield while gaining upside convexity exposure at current spot levels,” they concluded.
