At the last moment, US debt "bets on Harris" and Bitcoin "bets on Trump"
Written by: Zhao Ying, Wall Street News
The U.S. presidential election remains tense and is the most evenly matched election in history. The market is also betting on different results. U.S. bonds turned to "betting on Harris" at the last minute, while Bitcoin is still "betting on Trump."
On Wednesday, as the U.S. election entered the vote counting phase, bond market traders increased their bullish bets on U.S. Treasuries at the last minute, with options, futures and cash positions all turning bullish, increasing the odds that Harris could win the election.
Bitcoin continues to support Trump. Its gains expanded by more than 2% on Wednesday and is now trading at $71,033, maintaining its biggest gain in a week.
Analysts believe that bonds are most afraid of a Republican sweep. Trump will push forward tax cuts and tariff plans, expand the fiscal deficit, and restart the era of inflation, which will push up the yield on 10-year U.S. Treasury bonds.cryptocurrency则可能双赢，特朗普毫无疑问是加密货币支持者，但哈里斯也暗示她不会继续像拜登那样对该行业进行严厉打击。
US debt turns to "betting on Harris"
U.S. bond investors are piling into trades that would profit from a rally in Treasuries, a scenario they see as more likely if Harris wins the election, while cutting bets on a Trump victory.
U.S. options activity since Monday has been dominated by short-term bullish bets as traders look to position for a possible Harris win after weekend polls showed her gaining an advantage over Trump.
The shift was also seen in futures markets, which saw new bullish bets on Monday, including a notable increase in demand for longer-dated bonds. Asset managers increased their net long position by about 182,000 10-year Treasury futures contracts in the week ended Oct. 29.
In addition, JPMorgan Chase & Co.'s latest client survey showed that net long positions in U.S. Treasuries were at their highest in about three months, another sign of shifting market sentiment.
The moves mark a shift for traders who had built bearish positions partly in anticipation of a Trump win, but as polls show the race deadlocked, investors are now preparing for the possibility of the opposite outcome and bracing for market volatility.
Bitcoin Still Supports Trump
The increase on Wednesday widened by more than 2% to $71,033, maintaining the biggest increase in a week and less than 5% below the record set in March.
Bitcoin's rise has been attributed to the so-called "Trump trade" as Trump supports digital assets.
While Trump has vowed to make the U.S. the global capital of cryptocurrency if he returns to the White House, establishing a strategic Bitcoin reserve and appointing regulators who love digital assets, signaling he is the most industry-friendly candidate, Harris has taken a more cautious approach, pledging support for a regulatory framework for the industry.
Bonds fear sweep, cryptocurrencies win-win?
Overall, the bond market is most afraid of a Republican sweep, while cryptocurrencies will perform well regardless of the scenario.
Analysts believe that a sweeping victory for the Republicans is seen as a "clear threat" to bond buyers. With the Republicans and Congress united, Trump will push forward with tax cuts and tariffs, expand the fiscal deficit, and restart the era of inflation. This will push up the 10-year Treasury yield, and the bond market may fall further.
On the other hand, a Harris victory with a split Congress could spark a relief rally, increasing the likelihood of gridlock that could keep a lid on government spending.
What happens in the other scenarios is almost entirely up for debate, with JPMorgan Chase & Co. strategists expecting a unified Democratic administration and Congress to lead to increased government spending, pushing up bond yields. But on the other hand, RBC Capital said that scenario is the most favorable for bonds, leading to higher corporate taxes, exacerbating the "unfriendly business" environment and weakening risk appetite.
In terms of cryptocurrency, analysts believe that Bitcoin is expected to benefit from Trump's victory. Trump is an active supporter of cryptocurrency. He said he would establish a strategic reserve of original cryptocurrency and appoint regulators friendly to the industry. But Harris' victory is not necessarily bad for the industry. She hinted that she would not crack down on the industry as severely as Biden did.
In the short term, cryptocurrency investors areXiaobai NavigationThe market may have partially digested the pessimistic sentiment. The price of Bitcoin once again surpassed the $70,000 mark.exchangeTrading funds have also received the largest inflows to date, and coupled with the fierce competition, the demand for hedging in the cryptocurrency options market has increased significantly.
Bloomberg statistics showOn Monday, 12 Bitcoin ETFs managed by BlackRock, Fidelity and other companies saw a staggering net outflow of $579.5 million, a record high. Option pricing suggests that the expected market volatility of Bitcoin on the second day of voting day will reach 8%.
In addition, options traders are ready for big profits in the future. According to data from Deribit, the largest cryptocurrency options exchange, for options expiring in March,contract, the largest open positioncontractThe concentration is around $100,000 and $110,000 in strike prices.
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