The US Factor: Why Bitcoin's Price is Tied to American News and Politics

[Jegileman]

Why is bitcoin price heavily affected by everything from the United States, when there’s a major news in America you’ll see speculators talking about how bitcoin price could go up or down as a result of that news. I saw that USA has the highest number of bitcoin miners, is anything related to why most of this news is affecting the price of bitcoin and is this how it will continue forever. Even when Biden decided to step down from the presidential race, many speculates that bitcoin could go up as a result of that.

[legiteum]

You make a good point: Bitcoin's price is deeply tied to US politics.

Maybe this why crypto spending in the US election has surpassed every other industry including Big Oil and healthcare.

It's worth noting that this year is the last time anybody can credibly say that Bitcoin can't be manipulated by governments like (say) sovereign currencies can. In fact, Bitcoin can (and is) manipulated by governments--especially the US--more than any currency in history. The price of Bitcoin now hangs on the words of every US politician--far more than the value of the US dollar does, for instance...

[d5000]

We started a whole thread about this in the Spanish forum. But we didn't come to a really convincing conclusion yet.

Regarding crypto users, the US seems to be only third in the world - of course there are only rough estimates, but it seems India and even China (despite the heavy restrictions) have more crypto users than the US, of course due to their larger population (see Triple-A estimates).

Main factors may be:

1) the US as the leading economy in general, and the presence of US news in the world's media headlines,
2) the US as the place where most modern "tech companies" reside -- in reality, most modern software companies, because industrial tech is mostly located in Asia
3) several founders of big cryptocurrency businesses (Binance, for example) and also altcoins are from the US or located in the US,
4) the Wall Street as the world's "money hotspot" and synonym of Capitalism in general, which is important above all for financial products like ETFs, but also crypto stocks,
5) of course, in recent years also the large mining sector (35-45% of the world's hashpower, according to estimates)

I think while these points of course are important, the importance for the crypto market in my opinion is disproportional. Much more bullish than a crypto-friendly legislation in the US, where already 15% of all people have owned crypto-assets, would be a crypto-friendly legislation in India for example, or a lifting of the restrictions in China. I'm thus quite bullish regarding the developments in Hong Kong (the authorization of Bitcoin and Ethereum ETFs there), because they can hint to a change in the Communist Party's views about Bitcoin and cryptos, and possible further removal of crypto restrictions in China.

[Zaguru12]

1) the US as the leading economy in general, and the presence of US news in the world's media headlines,

Among all the other keynotes I will simply say this is my strongest point, I think no matter how we try to make an argument for this, American been the leading economy means that’s it’s adoption of a new technology most especially when it has to do with the economy will have a major impact on the news than most countries, this doesn’t mean other country’s economy news or bitcoin related laws doesn’t have impact on it too. Remember when China banned mining or when the energy supply decreased due to the Russian/Ukraine war, they had their own impact too

It's worth noting that this year is the last time anybody can credibly say that Bitcoin can't be manipulated by governments like (say) sovereign currencies can. In fact, Bitcoin can (and is) manipulated by governments--especially the US--more than any currency in history. The price of Bitcoin now hangs on the words of every US politician--far more than the value of the US dollar does, for instance...

I don’t think, bitcoin isn’t manipulated rather investors are manipulated into making decisions which we all know will affect bitcoin, bitcoin price is dependent on the demand and supply of it, it is the investors that react to economic news which isn’t new. People feed on the words of the US election and make their decision. If a news broke out today and everyone doesn’t reacts that wouldn’t affect the market, so it is the supply and demand of investors that manipulate the bitcoin price

[peter0425]

Why is bitcoin price heavily affected by everything from the United States, when there’s a major news in America you’ll see speculators talking about how bitcoin price could go up or down as a result of that news.

I am guessing it would be because of USA’s general role in the economy of the world. The dollar is the reserve currency of the world and the fall or rise of the dollar can have massive impact on bitcoin.

It’s also because of sheer market size.

It’s difficult to say accurately just how many americans are investors of bitcoin but we can assume that there’s enough that any political or economic situation happening in USA can affect the investors and therefore affect the market.

Even when Biden decided to step down from the presidential race, many speculates that bitcoin could go up as a result of that.

Well that’s because Biden’s opposition is Trump who has been constantly mentioning bitcoin. Biden stepping down just increases the chances of Trump winning and by extension his ideas about bitcoin.

[d5000]

Remember when China banned mining or when the energy supply decreased due to the Russian/Ukraine war, they had their own impact too

That's correct, but from the US even minor news about presidential candidates (!), i.e. not even government actions, impact in price.

The China mining ban was intimately related to Bitcoin's core ecosystem. And mining was very concentrated in China until 2021. Regarding the Ukraine war, it mostly seems to have impacted due to its influence on inflation in almost all major markets, and that impacting on interest rates globally -- including in the US. Interest rate changes in major countries are not so much "news" stories, but fundamental reasons why people invest more or less in Bitcoin, because of the increased competition of traditional financial products (like bonds) when the rates are high.

To be fair, the US is one of the few countries where presidential candidates even used Bitcoin in their campaign. The only other country I know where this was a major topic is El Salvador. Even in Argentina for example, when last year a "Libertarian" (Javier Milei) won the presidential election, Bitcoin wasn't a significant campaign topic, although some minor politicians from Milei's party have publicly supported cryptocurrencies.

[legiteum]

I don’t think, bitcoin isn’t manipulated rather investors are manipulated into making decisions which we all know will affect bitcoin, bitcoin price is dependent on the demand and supply of it, it is the investors that react to economic news which isn’t new. People feed on the words of the US election and make their decision. If a news broke out today and everyone doesn’t reacts that wouldn’t affect the market, so it is the supply and demand of investors that manipulate the bitcoin price

A common criticism of the US Dollar and other sovereign currencies is that they can be manipulated by politics: governments can inflate their value by issuing new currency, and politics is what controls that. Hence political winds can alter your investment in that currency, which makes it a poor investment.

Bitcoin has the same problem, but ten times worse...

[Darker45]

Bitcoin is just one among many that's heavily affected by US hegemony. In one way or another, the US leads the world. Even back in my small town, my father's old radio which broadcasts local stations relays to us what's happening in the US.

I guess all eyes are in the US, perhaps because everything's there. As regards Bitcoin, the mining is there. The ATMs are there. All kinds of platforms offering services all over the world are there. The most influential ETFs in the world are based there. The richest Bitcoin owners are from there. The list goes on.

But I guess this is also partly because we're fixated on the US all the time. We don't have to. But it has already gone to a ridiculous extent that even the most inconsequential event happening in the US like Snoop Dogg shitting on his pants could be associated with the next direction the Bitcoin price would take.

[ranochigo]

Bitcoin is heavily intertwined in our financial systems, see the ETFs, different companies and governments holding their share of Bitcoin. Fiat has a direct correlation with Bitcoin because of how fiat moves and how the economic outlook is supposed to be. Think of how S&P or NASDAQ moves when Jerome Powell speaks. A poor market outlook results in a general downward trend for the majority of the market save for inflation hedge like precious metals.

It'll be naive to think that there is any currency out there which is free from the influence of news and politics anywhere in the world, much less from one of the biggest and most prosperous countries. Cryptos like Bitcoin will always be affected by politics, same as literally anything that has any value in the world. Think of this: If one of the biggest countries in the world shows signs that they'll be easing policies on Bitcoin, then obviously the optimism on Bitcoin would be high -> higher prices.

You also highlighted an important phrase: Speculation. Crypto in general can still be treated like a speculative currency, where traders are eager to predict the general trend of Bitcoin, if it'll rise or fall. This would obviously lead to the market being more volatile than usual.

[fuguebtc]

Why is bitcoin price heavily affected by everything from the United States, when there’s a major news in America you’ll see speculators talking about how bitcoin price could go up or down as a result of that news. I saw that USA has the highest number of bitcoin miners, is anything related to why most of this news is affecting the price of bitcoin and is this how it will continue forever. Even when Biden decided to step down from the presidential race, many speculates that bitcoin could go up as a result of that.

Even the entire world economy is under the influence and domination of the US, and bitcoin is also a part of the world economy , so it is not surprising that it cannot avoid the impact of the US . The US market is considered the center of the entire world from finance, technology, military, economics...so you should not be surprised to see them having a significant impact on most fields and industries  . 

Some say bitcoin is decentralized and not controlled by anyone, that's not wrong but don't forget that bitcoin is being used by people and people are also part of the world economy and we cannot avoid the impact of the world economy. So don't expect bitcoin to be immune to the outside world.

[Helena Yu]

It's because medias and people always like to correlate one thing with another thing.

We can't deny there are many traders out there, they usually rely their decision on global news, so whenever x news from x medias launched, they will make x decision.

But, for long term holders, these news are useless. Bitcoin price will keep moving whathever the news and politics comes up, after all the longest holder will win.

Bitcoin is decentralized, anyone can move create and send coins, miners can move to wherever they want, there's no rules miners must mine in US.