- Bitcoin has performed relatively well following past US presidential elections in 2012, 2016, 2020, regardless of the winning party. However, this is the first presidential election where cryptoassets have been a part of the actual discussion which is why there are important nuances between both candidates.
- If the US elections were held today, a Trump win would imply a hypothetical performance of approximately +10.7% for Bitcoin (BTC) while a Harris win would imply a performance of around -10.5%, based on historical sensitivities of bitcoin's performance to these relative betting odds.
- Irrespective of the US election outcome, the very bullish confluence of the current Halving cycle and a renewed business cycle upturn induced by the latest monetary policy pivot is bound to provide a significant tailwind for Bitcoin and other cryptoassets over the coming months and well into 2025.
On the 5th of November, US voters will head to the ballot box to decide who will be the 47 th president of the United States. The US presidential election is one of the most important political events in the world, and for this election in particular, cryptoasset investors are increasingly interested in the potential impact of the election outcome on cryptoassets. In addition to the presidential election, US voters will also decide which party will end up in the majority in both houses of congress. This will also be a key factor impacting cryptoasset markets.
In this quantitative research piece, we will focus solely on the potential performance impacts of the US election on the cryptoasset markets.
In this context, here are the key historical observations with respect to the crypto markets:
1st observation: Bitcoin has performed relatively well following past US presidential elections in 2012, 2016, 2020, regardless of the winning party.
Bitcoin has generally performed very well following past US presidential elections, regardless of the winning party. It is worth highlighting that bitcoin has exhibited diminishing returns over each of those past election cycles, for example, following the last US election in 2020 bitcoin exhibited a lower overall return in comparison to the previous US election in 2016.
However, on average, Bitcoin has increased by approximately +4,268% after 400 days of the election over the past 3 elections in 2012, 2016, and 2020 respectively.
2nd observation: Past US election events have aligned well with both Bitcoin Halving events and US business cycle troughs, which are likely the main factors behind Bitcoin's stellar performance over the past 3 election cycles in 2012, 2016 and 2020. We have a similar alignment in this cycle.
It is also worth highlighting that Bitcoin's stellar performance in the past was most-likely not only related to the US election cycles alone but also probably more important macro and coin-specific factors.
US election cycles have generally aligned well with both Bitcoin Halvings which happen pre-programmed approximately every 4 years and also US business cycle troughs shown here as troughs in the ISM Manufacturing Index.
In other words, both supply shocks from the Halving and business cycle recoveries that tend to go hand in hand with an increase in cross asset risk appetite have most-likely contributed to this remarkable performance in the past.
The good news is that we have a similar alignment around this US election event as the latest Bitcoin Halving just occurred on the 20 th of April 2024 and the US business cycle also appears to be near its trough based on current readings of the ISM Manufacturing Index. Our previous analyses also imply that the positive effect from the Halving has just started to kick in around August this year and is now becoming an increasing tailwind for Bitcoin.
3rd observation: In general, major cryptoasset prices appear to be positively correlated with Trump's odds and inversely correlated with Harris' odds implying that the crypto market regards a Trump presidency as the preferred outcome. DOGE and ADA appear to be most sensitive to these potential outcomes, and are also statistically significant, therefore would likely be the best cryptoassets to "trade" this election.
To estimate the potential performance effects of the upcoming US election outcome, we have analysed the respective performance sensitivities to a change in relative betting odds between Trump and Harris.
Note: in our analysis we used an average of Polymarket and PredictIt betting odds to control for potential biases between those platforms. The results imply that the large majority of major cryptoassets appear to be positively correlated with a rise in Trump odds and inversely correlated with a rise in Harris odds (sole exception here would be TON).
Average of Predictlt & Polymarket Odds
*significant at the 10% level, **significant at the 5% level; data as of 09-10-2024
→ If the US elections were held today, a Trump win would imply a performance of approximately +10.7% for Bitcoin (BTC) while a Harris win would imply a performance of around -10.5%, based on historical sensitivities of bitcoin's performance to these relative betting odds.
4th observation: Most cryptoasset performances are still statistically insignificant but correlations of major cryptoassets to those betting odds have been rising structurally over the past weeks. Hypothesis: Crypto performances will become increasingly sensitive to those betting odds as we approach November 5th.
A caveat of the above results is that most major cryptoassets such as BTC or ETH do not appear to be statistically significant to those relative betting odds (see note above). Only the sensitivities of Cardano (ADA) and Dogecoin (DOGE) appear to be statistically significant and also the most sensitive from a pure performance perspective.
Another caveat is the relatively low R^2 across most major cryptoassets, which implies that other factors outside the US election appear to play a much larger role. In fact, our most recent analysis implies that Bitcoin's performance was explained most by macro factors such as US Dollar and monetary policy as well as coin-specific factors such as the Bitcoin Halving.
That being said, correlations of cryptoassets to those relative US election odds have been rising over the past few weeks. Our expectation is that these correlations will likely continue rising as we approach November 5th.
At the time of writing, average betting odds across multiple betting platforms have recently flipped in favour of Trump. However, the differences in national polling averages between both candidates are still within the margin-of-error which is why the US election outcome is still "too close to call" at this point.
However, irrespective of the US election outcome, the very bullish confluence of the current Bitcoin Halving cycle and a renewed business cycle upturn induced by the latest monetary policy pivot is bound to provide a significant tailwind for Bitcoin and other cryptoassets over the coming months and well into 2025.
Bottom Line
- Bitcoin has performed relatively well following past US presidential elections in 2012, 2016, 2020, regardless of the winning party. However, this is the first presidential election where cryptoassets have been a part of the actual discussion which is why there are important nuances between both candidates.
- If the US elections were held today, a Trump win would imply a hypothetical performance of approximately +10.7% for Bitcoin (BTC) while a Harris win would imply a performance of around -10.5%, based on historical sensitivities of bitcoin's performance to these relative betting odds.
- Irrespective of the US election outcome, the very bullish confluence of the current Halving cycle and a renewed business cycle upturn induced by the latest monetary policy pivot is bound to provide a significant tailwind for Bitcoin and other cryptoassets over the coming months and well into 2025.
Informazioni importanti
Le informazioni contenute nel presente materiale hanno finalità esclusivamente illustrative o informative e non costituiscono consulenza in materia di investimenti, raccomandazione personalizzata, né un’offerta o sollecitazione al pubblico risparmio.
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Bitwise Europe GmbH, costituita secondo il diritto tedesco, è l’emittente degli Exchange Traded Products (“ETP”) descritti nel presente Documento ai sensi di un prospetto di base e delle relative condizioni definitive, eventualmente integrati nel tempo e approvati dalla Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin). L’approvazione del prospetto da parte di BaFin non costituisce un giudizio di merito sull’investimento né un’approvazione del presente contenuto da parte di CONSOB.
Prima di effettuare un investimento in prodotti emessi da BEU, è opportuno verificare con i propri consulenti professionali e con il proprio intermediario che tali prodotti siano disponibili nella propria giurisdizione e coerenti con il proprio profilo di rischio. Ogni decisione di investimento dovrebbe essere assunta tenendo conto della propria situazione personale, dopo aver ottenuto consulenza indipendente di natura finanziaria, fiscale e legale.
Capitale a rischio. Le cripto-attività sono strumenti ad elevato rischio e caratterizzati da elevata volatilità. Il valore degli investimenti in cripto-attività e in ETP con esposizione a cripto-attività può diminuire così come aumentare e gli investitori possono perdere parte o la totalità del capitale investito. Nessun sistema di garanzia o indennizzo protegge dalle perdite derivanti dall’andamento di mercato. Le performance passate non sono indicative di risultati futuri. Le dichiarazioni previsionali non costituiscono garanzia di risultati.
Prima di investire, si raccomanda di leggere attentamente il prospetto di base e le relative condizioni definitive, in particolare la sezione “Fattori di rischio”, disponibili sul sito https://bitwiseinvestments.eu/it/
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