As the United States approaches its presidential election on Tuesday, November 5, 2024, the Bitcoin market is bracing for significant volatility. In the lead-up to the election, Bitcoin surged to a high of $73,620 on Tuesday, likely reflecting investor optimism about a possible victory for former President Donald Trump. However, on Friday, the price of BTC experienced a correction, falling to $68,830 amid more cautious sentiment and risk aversion as the elections approach.
How to trade Bitcoin during the U.S. elections
Alex Krüger, an Argentine economist and recognized cryptocurrency analyst, shared his strategic framework on how to trade Bitcoin during the U.S. electoral period through his X account. Krüger described scenarios based on possible electoral outcomes, highlighting that a Trump victory could push Bitcoin to $90,000 by year-end with a 55% probability, while a victory by Vice President Kamala Harris could establish Bitcoin around $65,000 with a 45% probability. He emphasized that timing will be important: "Expect the movement to be swift if Trump wins. Markets rarely wait for laggards in binary events that are not largely first-hand."
Krüger also noted that the current price of Bitcoin, which he expected to be in the range of $65,000-$68,000 before election night, had been "overshot" in relation to the odds favoring a Trump victory. He pointed out the uncertainty surrounding the election results, which largely depends on the vote count in Pennsylvania, which could delay the announcement of a clear winner.
"It largely depends on the Pennsylvania count, whether it is lopsided or not. It could be as soon as Tuesday night, Eastern Time, or days later if the count is very close. The sooner we have clarity, the easier it will be," Krüger stated.
Regarding market sentiment, Krüger expressed a bullish outlook on stocks regardless of the election outcome, unless there is an unexpected 'blue sweep' where Democrats gain both the presidency and majorities in Congress. He explained that 'stocks drag Bitcoin'.
In his personal investment strategy, Krüger revealed that he is positioned with long positions in Bitcoin and Nvidia and plans to go long on Solana (SOL) if Trump wins. With this, Krüger is likely betting on the approval of the Solana exchange-traded fund (ETF) in the United States.
Krüger's analysis suggests that the market has partially priced in a Trump victory, anticipating that a Trump administration could boost the price of Bitcoin. "Markets have partially priced in a Trump victory. We (the market, as a whole) expect Trump to drive cryptocurrency prices up due to greater regulatory clarity and the implementation of pro-crypto policies," wrote the analyst.
Additionally, he expects Trump's focus on increasing government spending to stimulate short-term economic growth, positively impacting stocks, a sector closely linked to Bitcoin's performance.
In contrast, a Harris victory would likely represent a continuation of existing policies, unless there is a significant Democratic sweep. Krüger concluded: "Based on betting markets and various electoral forecasting models, Trump's odds are in the range of 50% to 63%. Therefore, it is 'safe' to assume that a Republican victory is far from fully priced in. Such a contested situation is common before elections. That is why I do not expect people to 'sell the news'."
