Analysts pointed out that this year's Bitcoin market "is driven by two important engines."

If Trump returns to the White House in November, the dollar could weaken, which some analysts believe would be a positive for Bitcoin.

One of the focus policy issues for the Trump campaign in recent weeks has been the strength of the dollar relative to the currencies of its trading partners. As the likelihood of Trump winning the U.S. election increases, the dollar has begun to fall. Currency depreciation supports assets such as cryptocurrencies and gold, which have rebounded under a strategy known as the "Trump trade."

"Bitcoin and cryptocurrency investors have been given a huge lifeboat this year, propelled by two important engines," said Fadi Aboualfa, head of research at Copper Technologies Ltd. The launch of a spot bitcoin ETF in January helped bitcoin hit a record this year; more recently, the increased likelihood of Trump's victory has caused bitcoin to rise sharply.

However, Aboualfa noted that this is more due to economic factors than Trump’s public commitment to support the cryptocurrency industry. Markets expect the dollar to depreciate against other currencies, which means that so-called safe-haven and alternative assets may continue to appreciate.

“If the Trump administration is able to deliver on what they’ve said they’d like, which is reflation, more tariffs, a weaker dollar, bigger budget deficits, then safe-haven or alternative assets could actually strengthen,” said Shaun Osborne, chief foreign exchange strategist at Scotiabank, pointing to gold as another possible winner.

Trump's views on the dollar break with precedent. The United States has traditionally supported a strong dollar, at least verbally. Former Treasury Secretary John Connally told a group of central bankers in 1971: "The dollar may be our currency, but it is your problem."

Since Biden and Trump debated in June, the dollar has moved largely inversely with Trump's chances of winning the election, providing a favorable backdrop for his potential economic agenda. The dollar hit a nearly two-month low this month after Trump said in an interview that a strong dollar was hurting U.S. exports.

"We have a major currency problem," Trump said, noting that the weakness of currencies such as the yen relative to the dollar provides an advantage to those countries. His new running mate, JD Vance, has also called for a weaker dollar.

But some policies on Trump’s wish list could still threaten that outcome. For example, tariffs that boost growth would generally strengthen the dollar and put pressure on the Federal Reserve to raise interest rates, Osborne said. He added, “A lot of Trump’s policy goals seem to be at odds with each other.”

Trump's chances of reelection took a hit as Harris campaigned for the Democratic nomination. While the dollar initially slipped when Biden dropped out of the presidential race, it is expected to be the main beneficiary of Harris's candidacy. If momentum builds for a Harris victory, it's unclear whether alternative assets like Bitcoin will continue to strengthen.

"In the short term, there are many other assets that will perform well, and it's always short-term traders and investors who set the latest price of Bitcoin," said Noelle Acheson, author of the Crypto Is Macro Now newsletter. The German government's massive sell-off has caused significant volatility in Bitcoin recently, and similar blows may be difficult for Bitcoin to overcome regardless of who wins the election.

In addition, data compiled by Bloomberg shows that Bitcoin and global stock markets are diverging. The 30-day correlation coefficient between Bitcoin and the MSCI World Index is falling towards -0.20. A correlation coefficient reading of 1 indicates that assets move in sync, while -1 indicates an opposite correlation between assets. This is a rare phenomenon because the indicator has usually been positive since 2020.

“Bitcoin is now a proxy for Trump’s victory, but for U.S. stocks, there are no clear winners and losers in the ‘Trump trade,’ ” said Sean McNulty, head of trading at Arbelos Markets.