As Trump’s electoral victory became clear, global markets plunged into volatility.
Dow Jones stock futures dropped by 3.8% in premarket trading, SP futures by 3% overnight, and Nasdaq futures by almost 5%. All major European indices dropped by 2%, on average. The price of bitcoin, however, surged around 4% to reach highs of $738.33 overnight. The cryptocurrency saw similar gains in June after the Brexit vote, suggesting that investors are increasingly turning to bitcoin in times of political and economic uncertainty.
There are a number of reasons why bitcoin proves attractive in these circumstances:
- It’s an alternative asset. Alternative assets are non-traditional assets — other examples include precious metals and art. They typically do not move in the same direction as the stock market and therefore are popular with investors looking to diversify their portfolios.
- It is a decentralized currency. This means it isn’t affected by any one country’s economic changes or policies. In turn, this can make it particularly attractive in periods of political turmoil when policies affecting national currencies, like interest rates, for