Crypto market patterns show consistent dips before US elections, followed by potential rallies.
Key Takeaways
- Bitcoin typically experiences dips 2-3 months before US elections, followed by post-election rallies.
- Market uncertainty and correlation with S&P 500 contribute to Bitcoin's election-related price patterns.
Bitcoin’s (BTC) price behavior shows a consistent pattern around the US presidential elections, with significant corrections from two to three months before the event followed by a rally afterward.
This trend was observed in 2012, 2016, and 2020, as highlighted by Bitfinex analysts through insights shared with Crypto Briefing. This movement is influenced by key factors.
The first factor pointed out by the analysts is the fact that the presidential elections align with the end-of-year period, which is traditionally volatile for financial markets, especially in summer.
“This seasonality affects all markets, including Bitcoin. In previous election cycles, such as in 2016 and 2020, Bitcoin experienced notable dips before the election, followed by substantial post-election rallies. This pattern was also observed in 2012, indicating a recurring trend linked to the election season,” they added.
Moreover, the uncertain outcome of the elections typically creates a risk-averse environment, affecting Bitcoin along with traditional markets. BTC’s increasing correlation with the S&P 500 contributes to this pattern, as both react to broader economic uncertainties.
Post-election, Bitcoin has historically experienced substantial gains. After the 2016 election, Bitcoin’s price surged as market certainty returned. A similar trend occurred in 2020, with sharp increases in the months following the election.
However, experts caution that correlation does not imply causation. While Bitcoin’s movements align with election cycles, other factors such as US monetary policy, global economic conditions, and technological advancements in the crypto space play significant roles in shaping its price behavior.
As the 2024 election approaches, market participants are watching for similar patterns, considering the SPX’s recent all-time highs and expectations of rate cuts adding to market uncertainty.
Trump leads on Polymarket
The Polygon-based prediction market Polymarket has been used as a thermometer for the US elections, with the odds of each candidate being used to gauge the likelihood of winning.
Despite Donald Trump’s odds of winning peaking at 72% on July 16, the Republican representative has been losing ground to Kamala Harris and only holds a 1% lead currently, in a 50% to 49% situation.
Meanwhile, Harris’ odds surpassed Trump’s for a few days in August, with the Democrats’ candidate leading for four consecutive days from Aug. 9 to Aug. 13. Harris’ lead even reached 10% over Trump’s.
