Pro-Trump rioters lay an unprecedented siege on the U.S. Capitol, effectively shutting down and forcing an evacuation of the Congressional session intended to certify the electoral votes in favor of president-elect Joe Biden. One thing is clear: the U.S. government is in turmoil.
Meanwhile, the Dow Jones ended the day on a record high and the S&P 500 also gained. The US Dollar Index was little changed, as were US Treasuries. Cryptocurrencies, which are meant to protect from such chaos, also rallied, though it was likely a continuation of the current trend and not a reaction to the US political landscape.
The Everything Rally
When asked how the current situation in Washington might affect DeFi markets, Messari researcher Ryan Watkins tells The Defiant it’s tough to say, but his gut feeling is that any potential blip would be relatively small.
“Although what’s happening in DC right now is terrible I can’t think of anything that could happen from here that affects markets, practically speaking.”
Cryptocurrencies are rallying, because everything is rallying amid a risk-on market, said Meltem Demirors, chief strategy officer of CoinShares.
“The institutional trust narrative doesn’t matter that much,” she told The Defiant. “If it did, people wouldn’t be buying on Coinbase, they’d be buying on Local Bitcoins. I think it will take a few more years before people really get it.”
In traditional markets, stocks climbed on speculation that a Democratic senate would increase chances of a stimulus bill passing. And while historically markets don’t do well with political uncertainty, it appears investors are shrugging yesterday’s events off.
That said, an armed attack on the U.S. Capital is unprecedented. President-elect Joe Biden called it an “insurrection,” The Atlantic called it a coup. This brings up questions as to how such an event could potentially affect the perception of U.S. national security on a global scale, and on the long-term strength of the USD.
While unlikely to be a short-term driver in cryptocurrency market prices, declining trust in institutions, highlighted by the siege of the US Capitol, was what prompted the creation of Bitcoin in the first place, and continues to draw enthusiasts to the space. If anything, events like these could even serve to drive more people to cryptocurrency, which could provide a haven in the long run amidst a fraught political landscape.
A Bet on Chaos
Castle Island Ventures partner and Coinmetrics co-founder Nic Carter referred us to his Nov. 24 Tweet (which he had just retweeted), saying: “‘I don’t like Bitcoin, it’s a bet on chaos.’ ‘…does the world look orderly to you?”
“This is my general view,” Carter said.
At the time of writing, the situation in Washington D.C. is still playing out. Police are actively attempting to disarm explosives and clear rioters out of the Capital building after Trump released a video message to his supporters saying, “Go home. We love you. You are very special.”
Content creator DeFiDad likely reflected the thoughts of many in crypto in his tweet,
“Imagine watching all this chaos and remaining in US dollars.”
We’ll continue to keep an eye on how everything plays out, both on the political stage and in the market. No doubt the rest of the world will be watching, too.