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Bitcoin surged on Monday following the assassination attempt on Donald Trump as traders increased bets that he will win the US presidential election in November.
Bitcoin prices rose more than 10% to a two-week high of $63,595 after a gunman attempted to assassinate President Trump at a weekend rally, wounding him in the ear. Republican President Trump is seen as a pro-cryptocurrency candidate, hosting industry executives at Mar-a-Lago and expressing enthusiasm for bitcoin mining in the United States.
The Trump campaign also became the first major US political party to accept cryptocurrency payments, raising hopes of a departure from the US regulatory crackdown on the industry seen in recent years.
“The chances of Donald Trump winning have increased significantly,” Grzegorz Drožiž, a market analyst at currency firm Konotokia, said, adding that a Trump presidency would “have a positive impact” on cryptocurrencies.
Immediately after the shooting, odds that Trump would win the November presidential election soared, according to live trading on political betting site PredictIt.
Shares of Trump’s social media company Truth closed up 31%. Trump Media & Technology Group, which reported an operating loss of $98 million for the three months ended March 31, went public that month in a merger with a blank-check company and saw its shares soar recently ahead of last month’s debate between Trump and President Joe Biden.
Shares in prison operators rose, with Geo Group Inc. up nearly 10 percent and CoreCivic Inc. up 8 percent. Shares in U.S. gun makers also soared, with Sturm Ruger Inc. up 12 percent and Smith & Wesson Brands Inc. up 14.3 percent.
“The expectation with prison stocks is that if Trump wins, there will be increased border security, which will benefit prison companies,” said Michael O’Rourke, chief market strategist at Jones Trading. He’s not convinced guns are an obvious trade tied to Trump. “Gun stocks are always volatile around election cycles, so it just ends up adding a lot of noise to the market.”
The S&P 500 ended the day up 0.3%, just shy of a new record high.
“A presidential candidate surviving an assassination attempt is good news, so the reaction (Monday) is appropriate,” O’Rourke continued. “But I don’t think stocks are going to go up a few percentage points just because Trump is more likely to win the election by a larger margin than before.”
But the drop in Trump’s reelection chances sent ripples across financial markets, pushing Treasury yields higher in a more subdued way than the reaction to Biden’s dismal debate performance.
Many investors believe President Trump’s tax cuts will boost budget deficits and inflation, hurting Treasuries and sending yields higher in a similar pattern to what happened after his 2016 election victory.
The US Dollar Index, which tracks the dollar against six major currencies, fell in July as expectations grew for a rate cut by the Federal Reserve in September but has since stabilized.
The yield on the benchmark 10-year Treasury note rose 0.04 percentage point to 4.22 percent, reflecting a small drop in prices.
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Monday’s move “is in line with the Trump theme given the general perception that he is good for business and supports cryptocurrencies,” Rabobank analysts said in a client note.
“For the markets, the complexity of the US political backdrop is summed up in the assumption that the weekend’s events will lead to an increased likelihood of a Trump victory in November’s presidential election,” they added.
