Bitcoin’s Upward Momentum Unlikely to Increase Before US Elections, Data Indicates
Bitcoin’s price movements exhibit a consistent trend surrounding the US presidential elections, characterized by significant declines occurring two to three months before the event, followed by a subsequent upsurge. This pattern, identified by Bitfinex analysts in collaboration with Crypto Briefing, has been observed during the 2012, 2016, and 2020 election cycles and is influenced by several key elements.
One of the primary factors highlighted by analysts is the synchronization of the presidential elections with the end-of-year period, traditionally marked by heightened volatility across financial markets, particularly during the summer months. This seasonality impacts all markets, including Bitcoin, with noticeable downturns before the election followed by substantial rallies post-election. This recurring phenomenon, evident in the 2012, 2016, and 2020 elections, underscores a consistent association between Bitcoin’s price behavior and the election season.
Furthermore, the uncertainty surrounding election outcomes typically fosters a risk-averse environment that affects Bitcoin alongside conventional markets. The increasing correlation between Bitcoin and the S&P 500 further reinforces this trend, as both respond to broader economic uncertainties in a similar manner.
Historically, Bitcoin has witnessed significant price surges post-election, with notable gains recorded after the 2016 election as market certainty was restored. A similar pattern emerged in 2020, with sharp price increases in the months following the election. However, experts caution against assuming causation solely based on correlation. While Bitcoin’s movements align with election cycles, other factors such as US monetary policies, global economic conditions, and technological advancements within the crypto space play pivotal roles in shaping its price dynamics.
As the 2024 election approaches, market participants are closely monitoring for analogous patterns, given the recent all-time highs of the SPX and expectations of rate cuts that contribute to market uncertainty.
On another front, the Polygon-based prediction market, Polymarket, has served as an indicator for the US elections, with the odds of each candidate reflecting their likelihood of winning. Despite Donald Trump’s odds peaking at 72% on July 16, the Republican candidate has seen a decline in favorability compared to Kamala Harris, currently holding a marginal 1% lead in a 50% to 49% scenario. Harris briefly surpassed Trump’s odds in August, leading for four consecutive days with a peak advantage of 10%.
In conclusion, the interplay between Bitcoin’s price behavior and the US elections showcases a nuanced relationship influenced by various factors, underscoring the intricate dynamics at play within the cryptocurrency market during significant geopolitical events.
