For a while, Bitcoin’s price action and the political fortunes of former US President Donald Trump ran in tandem — but not so much anymore.
That’s according to Quinn Thompson, founder of Lekker Capital, a hedge fund that specialises in using macroeconomic data to trade crypto assets.
“Bitcoin was more obviously a Trump trade when Trump had this 60-40 lead against [President] Biden in the polls,” Thompson told DL News.
“It was like, Bitcoin is going to be fine, because he is going to win,” Thompson added.
That changed, Thompson said, when Biden dropped out of the race and Vice President Kamala Harris became the Democratic Party nominee.
Trump and Harris are now neck-to-neck in most polls, and gamblers on Polymarket give them even odds to win the presidency this November.
The uncertainty around the election has forced investors to stop taking a crypto-friendly administration for granted, Thompson said.
In other words, even if Trump keeps making overtures to the crypto industry all the way to November 5 — election day — investors cannot really frontrun the potential changes with the same peace of mind as they would have if Trump was still clearly winning.
“That ambiguity is making people weigh other factors that influence Bitcoin’s price, like growth, recession concerns, the Federal Reserve, and liquidity in the system,” Thompson said.
Trump and Harris
Historically crypto-agnostic, Trump threw his support behind the crypto industry in early May.
Among other things, he’s promised to free Silk Road creator Ross Ulbricht, met with Bitcoin mining executives, and spoken at the biggest crypto event of the year in Nashville, Tennessee.
The Biden administration, meanwhile, has largely given crypto the cold shoulder.
For example, it recently vetoed a motion to repeal SAB 121, a controversial crypto accounting rule, despite bi-partisan support for the repeal.
The Harris campaign, for its part, has said that she wants to “reset” relations with the crypto industry. But so far, she has not taken any public stance on the matter.
Tom Carreras writes about markets for DL News. Got a tip about Bitcoin, Trump, and the election? Reach out at tcarreras@dlnews.com.
