- Bitcoin has reached new all-time highs and crypto markets are
rallying across the board in anticipation of a more pro-crypto regulatory environment in the US as Trump
has likely won the US election.
- The latest US election results imply that the political sentiment
has significantly shifted towards a pro-crypto stance in the US and will likely accelerate the
mainstream adoption of cryptoassets.
- The decline in political uncertainty in the US could be the
catalyst for a renewed bull run in Bitcoin and cryptoassets.
Bitcoin vs US Presidential Election Odds
Source: Bloomberg, Bitwise Europe
At the time of writing this report, Bitcoin has reached new all-time highs and
crypto markets are rallying across the board in anticipation of a more pro-crypto regulatory environment in
the US.
Trump is likely to win the electoral college majority as well as the popular vote in the recent
US presidential election. At the time of writing the report, Polymarket
odds already show a 99% chance and the New
York Times estimates a probability of around 93% of Trump winning the
presidency.
What is more is that there is a high probability for a so-called “Republican sweep”
that includes the presidency, as well as the majority in both the House and the Senate. According to the
latest odds provided by Polymarket, this
probability currently sits at 92%. Republicans have already officially secured the
majority in the senate.
It is quite likely that the final election results will already be called today.
The latest US election results imply that the political sentiment has significantly
shifted towards a pro-crypto stance in the US and will likely accelerate the mainstream adoption of
cryptoassets as outlined here.
For instance, in the Ohio senate race Bernie Moreno (R) defeated Sherrod Brown (D).
Before the elections, Moreno publicly stated that he will defend the crypto industry in the senate and fight
Senator Warren’s “war on crypto”. Meanwhile, Brown voted against the repeal of SAB121
earlier this year and has been openly anti-crypto.
At the time of writing this report, the vast majority of elected congressmen and senators in
the house and senate are pro-crypto according to data provided by https://www.standwithcrypto.org/races.
Although both presidential candidates – Trump and Harris – have made pro-crypto
statements before the election, Trump has made direct promises to the Bitcoin and crypto industry which have
even been part of the official
programme.
There are several reasons why this is relevant for cryptoassets:
- A more pro-crypto stance among US regulators will likely allow a
more diverse set of investment opportunities such as ETFs. There are still several spot crypto ETFs
waiting for the SEC’s approval including spot ETFs on Solana, and XRP.
- Cryptoasset service providers will be freer to operate and will
likely face less pressure by regulators, i.e. the so-called “Operation Chokepoint 2.0” will
likely end.
Moreover, Trump has made several positive election promises, including the
following:
- Establish a strategic national Bitcoin stockpile
- Establish favourable regulation to encourage domestic Bitcoin mining
(“Bitcoin made in the USA”)
- Install a Bitcoin/crypto advisory council in the first 100 days in
office
- Replace SEC chief Gary Gensler who is rumoured to be critical
of cryptoassets
Cryptoasset markets have already performed very well in anticipation of these
developments.
Nonetheless, the decline in political uncertainty in the US could be
the catalyst for a renewed bull run in Bitcoin and cryptoassets as outlined here.
We want to reiterate 2 key observations about US election cycles:
1st observation: Bitcoin has
performed relatively well following past US presidential elections in 2012, 2016, 2020, regardless of the
winning party.
Bitcoin: Post-Election Performance
Source: Glassnode; Bitwise Europe
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.
Bitcoin price around significant dates
Source: Glassnode; Bitwise Europe
The good news is that we have a similar alignment around this US election event as the latest
Bitcoin Halving just occurred on the 20th 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.
To put short, Bitcoin would have likely rallied regardless of the outcome of the US
election over the coming months.
That being said, a Trump win is likely to accelerate the coming bull run in Bitcoin
and cryptoassets.
Bottom Line
- Bitcoin has reached new all-time highs and crypto markets are
rallying across the board in anticipation of a more pro-crypto regulatory environment in the US as Trump
has likely won the US election.
- The latest US election results imply that the political sentiment
has significantly shifted towards a pro-crypto stance in the US and will likely accelerate the
mainstream adoption of cryptoassets.
- The decline in political uncertainty in the US could be the catalyst
for a renewed bull run in Bitcoin and cryptoassets.
Informazioni Importanti
Le opinioni espresse rappresentano una valutazione del contesto di mercato in un determinato momento e non costituiscono una previsione di eventi futuri né una garanzia di risultati futuri. Sono soggette a ulteriori discussioni, integrazioni e modifiche.
Le informazioni contenute nel presente documento non sono intese a fornire, né devono essere considerate, consulenza contabile, legale o fiscale, né raccomandazioni di investimento.
Nulla in questa comunicazione deve essere interpretato come una raccomandazione, un’approvazione o un incentivo a intraprendere attività di investimento. Si invita il lettore a richiedere, ove opportuno, una consulenza legale, fiscale o finanziaria indipendente.
Per ulteriori informazioni sul contenuto di questa ricerca, si prega di contattare europe@bitwiseinvestments.com.
