Investors Digest Midterm Elections | Bitcoin Crossed A critical level

European and U.S. futures are struggling to make up their mind as investors digest the implication of the midterm election. The exit polls are showing that we have a split in Congress. As a result of this the dollar index has retreated and the gold price has moved higher. Most importantly, we have the price of Bitcoin touching the critical level of $6,500,  which is going to boost the confidence among the Bitcoin bulls. The 10-day historical volatility for bitcoin has dropped below the 10-day historical volatility of S&P500 and Nasdaq. This confirmed that the capitulation is on the horizon because bitcoin isn’t the kind of animal which can be put under control easily. But let’s get back to U.S. mid term elections.  

One thing is for certain, the midterm election was mainly about Trump. President’s policies have divided the country and this was the first major political test of his presidency. Donald Trump is still popular with his polices over in the United States as Republicans kept the control of the Senate. The Democrats are on track to reclaim the House, and a victory would make things a little arduous for the president for his remaining time in the office.  This is because president Trump would be left without congressional support and he would struggle to move his agenda towards the finish line. The Midterm elections have provided the Democrats with clues and a blue print for their next battle which is going to take place in 2020. Although, president Trump thinks that the Midterm elections have been tremendous success for him. The president’s controversial immigration policy has backfired for the Republicans candidates and this worked in favour of Democrats.  

Nonetheless, traders are going to shift their focus from the Mid-term election and focus on things which actually matters around the globe. So far, the U.S. economic health remain robust and despite the trade war, there hasn’t been any surprises in the trade numbers although the earning season has told us that the trade war is taking the toll.

For now , the order of the day is the Trump trade which means equities  and the dollar are likely to move higher especially given that one of the major risk event is behind us. It will not be a smooth sailing as before and that is purely because of the bipartisan results of the midterm elections. The volatility index would remain elevated because the US debt problem is real and it is growing. In the light of Midterm elections, the fiscal policy is likely going to change and the monetary policy would remain on It’s path under which the Fed would continue to increase the interest rates. This would increase the annualised cost of servicing the U.S. debt .