VanEck Advocates Bitcoin DCA Ahead Of Potential US Election-Fueled ATH

Investment asset management firm VanEck is advocating for a Dollar Cost Averaging (DCA) strategy for Bitcoin (BTC) ahead of the United States November election.

Mt.Gox, US And German Government Offloading Bitcoin

Matthew Sigel, the Head of Digital Assets Research at VanEck, acknowledged the recent sales of Bitcoin by the U.S and German governments and the Mt.Gox offload. He highlighted how they have impacted negatively on the price of Bitcoin and to this end, VanEck sent a letter to it clients. In the said letter, the company dived deeper, providing more details about the numerous Bitcoin sales.

Defunct cryptocurrency exchange Mt.Gox allegedly holds $8 billion worth of BTC with the goal of distributing all, starting with $3 billion. When these coins get to their beneficiaries, it is not yet clear what they would do; whether to sell or hodl. VanEck is hopeful that the Mt.Gox customers will hodl at least one-fourth of their holdings given Grayscale’s GBTC precedent.

Still, it is worth noting that Bitcoin has traded around $10 billion per day on crypto exchanges this year. This figure does not include those that were traded Over-the-counter (OTC). Again, there is the German government offloading up to 8,000 BTC from the 50,000 BTC that was seized from pirated movie site operators in early January, 2024.

Sigel pointed out that the current balance of the exchange is about 37,000 BTC. While the U.S. government holds only 213,297 BTC after transferring $240 million worth of BTC to Coinbase Prime.

“We think this weak price action likely reflects spiteful government selling into what was a relatively thin July 4th market, with an overhang of more sales potentially ahead,” Sigel opined.

Trump to Launch US Bitcoin Reserve

The expectation, however, is that the upcoming elections will trigger a new all-time-high (ATH) for Bitcoin.

This is coupled with the fact that Republican presidential candidate Donald Trump revealed plans to adopt a strategic Bitcoin reserve for the U.S. should he be appointed president. On this basis, VanEck’s advocacy for a DCA strategy is to ensure that investors are able to buy Bitcoin up to a target weight.

#Bitcoin has been weak in recent days due to the sales by government entities including the US & German Government and the fears of large distributions from the Mt. Gox estate. Here what we wrote to clients:

The Mt Gox trustee currently holds ~$8B of bitcoins. They have recently… pic.twitter.com/CAgmtaVWts

— matthew sigel, recovering CFA (@matthew_sigel) July 8, 2024

The firm sees 6% as a reasonable position size for both Bitcoin and Ethereum for most 60/40 benchmarked portfolios.

Meanwhile, Trump’s support for digital assets and crypto companies may give him an upper hand in the coming election. Joe Biden, his closest rival, has no plans to back down until he defeats Trump, an interesting twist that market investors are keeping eye on.

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