Bitcoin unlikely to rally before US elections
The fluctuation in Bitcoin's (BTC) value tends to align with the timeline of US presidential elections, displaying a pattern of significant declines approximately two to three months preceding the elections, with a subsequent upward trajectory observed post-election.
This cyclical behavior was noted during the election years of 2012, 2016, and 2020, according to insights from Bitfinex analysts. Various critical factors shape this pattern.
Analysts pinpoint the alignment of the presidential elections with the year-end as the primary factor, a period known for its financial market volatility, particularly during the summer months.
Such seasonality influences all markets, Bitcoin included. The election years of 2016 and 2020 saw Bitcoin's value taking a hit before the elections, only to recover remarkably afterward. This repetitious trend, also noticeable in 2012, underscores the influence of the election season on the cryptocurrency.
Furthermore, the elections' uncertain outcomes usually foster a cautious atmosphere, impacting Bitcoin alongside traditional markets. The growing synchronization between BTC and the S&P 500 emphasizes this trend, as both are sensitive to overarching economic uncertainties.
In the aftermath of elections, Bitcoin historically registers significant price ascents. Following the 2016 election, for instance, Bitcoin's value soared as market confidence was restored. A similar pattern emerged in 2020, with Bitcoin experiencing marked gains in the subsequent months.
Yet, experts warn against conflating correlation with causation. Although Bitcoin's price movements correspond with election cycles, other determinants like US monetary policy, worldwide economic conditions, and advancements within the cryptocurrency sector also play pivotal roles in its price dynamics.
As anticipation builds for the 2024 election, market observers are keenly watching for familiar patterns, especially considering the S&P 500's recent peak and the speculation surrounding potential rate cuts contributing to the uncertainty.
Polymarket, a Polygon-based forecasting platform, serves as a barometer for US election outcomes, employing the odds for each candidate as indicators of their probable success.
While Donald Trump's winning probability reached a high of 72% on July 16, the Republican candidate's advantage over Kamala Harris has dwindled to a mere 1%, standing at 50% to Harris's 49% currently.
Harris briefly outpaced Trump in August, maintaining the lead for four consecutive days from Aug. 9 to Aug. 13, with her advantage extending up to 10% over Trump during this timeframe.
