In a blog post published on October 11, André Dragosch, European Head of Research at Bitwise Asset Management, explored the potential implications of the 2024 U.S. presidential election on the crypto markets. With U.S. voters set to elect a new president on November 5, investors are keenly focused on how the outcome could impact the performance of various cryptoassets, particularly Bitcoin.
Dragosch outlined four key observations based on historical data and current trends in crypto markets. First, he noted that Bitcoin has historically performed well following U.S. elections, regardless of the winning party. He provided data showing that Bitcoin increased by approximately 4,268% in the 400 days following the past three elections (2012, 2016, and 2020), though the returns have diminished with each cycle.
Second, Dragosch highlighted the alignment between U.S. election cycles, Bitcoin Halvings, and business cycle troughs. He pointed out that the upcoming election coincides with Bitcoin’s most recent Halving in April 2024 and what appears to be a U.S. business cycle trough, as indicated by the ISM Manufacturing Index. This alignment has historically contributed to Bitcoin’s stellar performance, and Dragosch believes it could once again act as a tailwind for the asset.
Third, Dragosch’s report touched on the correlation between major cryptoasset prices and the odds of Donald Trump or Kamala Harris winning the election. According to Dragosch, Bitcoin and other cryptoassets appear to be positively correlated with Trump’s odds and inversely correlated with Harris’. He notes that Dogecoin (DOGE) and Cardano (ADA) are the most sensitive to these potential outcomes. Dragosch believes that if the election were held today, a Trump victory could result in a 10.7% increase in Bitcoin, while a Harris win could lead to a 10.5% decrease.
Finally, Dragosch emphasized that while most cryptoasset correlations with U.S. election odds are currently statistically insignificant, those correlations have been rising in recent weeks and are expected to continue increasing as the election approaches. He concluded that, regardless of the election’s outcome, the combined forces of the Bitcoin Halving and a potential U.S. economic recovery would likely provide a significant boost to Bitcoin and other cryptoassets in the months ahead.
🧵 How to Trade the US Election with #Bitcoin & Cryptoassets?Here are our Key Quantitative Insights for Investors 👇
— André Dragosch, PhD | Bitcoin & Macro ⚡ (@Andre_Dragosch) October 11, 2024
Featured Image via Pixabay
