The most important market news currently is the US presidential election. The results will be announced after 11:00 AM on November 6th, East 8 Time, which also indicates the landing of this round of news and will inevitably bring volatility to the market.
Let's first find evidence of the correlation between market volatility and the election.
Starting in October, the probability of Trump winning began to rise, peaking at a 65% chance around October 30th.
Looking back at the BTC market trend, it also began to rise from early October, reaching a peak near 73,600 around October 30th, close to historical highs.
In November, Trump's winning probability started to decline, while Harris's winning probability began to rise, leading to a correction in the Bitcoin market from its high.
From this set of data, we conclude that when Trump's winning probability is high (if elected), it is favorable for the crypto market, and Bitcoin prices rise.
When Harris's winning probability is high (if elected), it is unfavorable for the crypto market, and Bitcoin prices fall.
This reflects market sentiment. Of course, I don't understand politics or the situation in the US, so I cannot make a judgment on the election predictions. But at the same time, I also believe that politics is dark—darker than the financial market. The dark maneuvers within it are beyond our knowledge, so we cannot predict who will eventually be elected.
However, I understand trading and market sentiment, which can indeed help provide insights for our trading strategies.
First, we need to know why Bitcoin prices rise when Trump's winning probability increases. It's because Trump promised many crypto-friendly policies while campaigning, aligning himself with crypto users, leading the market to believe that his election will bring new support to the crypto market, thereby driving up coin prices.
However, we must understand that the election results do not mean he will immediately take office as president; he will only assume the presidency on January 20, 2025. This means there are still over two months during which, even if Trump takes office, he may not announce favorable crypto policies right away. Therefore, this promise can be seen as very distant, and it is uncertain whether he will even run.
From this perspective, the current market's favorable sentiment towards Trump's election is primarily emotional. Looking from the angle of presidential winning probability, the market has already preemptively exhausted the bullish sentiment surrounding Trump's potential victory.
Based on this perspective, I believe that after Trump wins, it will initially release positive sentiment in the crypto market, pushing prices to surge in the short term, but the sustainability will be weak (after all, it is driven by sentiment). Following this, early investors who are in profit will start to exit, leading to a price drop as sentiment wanes, and then it will enter a consolidation phase while waiting for the market to choose a new direction. (Refer to the BTC ETF during that period for comparison.)
So will Harris’s election necessarily be bad for the crypto market?
I don't think so. Although Harris made some pro-crypto statements during the campaign to garner votes, his attitude is clearly not as supportive as Trump's. However, this does not necessarily mean it will be bad for the crypto market. In the long run, a Harris administration may lean more towards controlling inflation and interest rates, which may not be a bad thing for the financial market.
Therefore, the current market's view that Harris's election will be bad for the crypto market is irrational and also reflects emotional sentiments (stemming from the contrast with Trump).
So if Harris comes to power and the market experiences a panic sell-off in the short term, I think this could become an opportunity. The original supporters of Trump will exit at losses, and those who are optimistic about the future will also flee, leading to a drop in market trends. It can be said that this drives out short-term holders. As long as the market can stabilize, wait for it to regain rationality, and those who were overly emotional will come to realize that the presidential election does not have such a significant impact on the market, then the market may warm up.
In summary, if Harris comes to power and the market experiences a brief panic sell-off, I think it will be a good opportunity to buy. (Not buying during the decline, but rather when signs of stabilization appear after the drop, or entering a consolidation phase.)
I have drawn the predicted trends for the future market on the chart for reference!
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