How did the U.S. election in 2024 affect the Bitcoin (BTC) exchange rate?
Bitcoin is approaching its A.T.H.
In March 2024, the price of Bitcoin (BTC) updated its all-time high, or A.T.H., at $73,750. However, there was then a downturn that lasted until October.
Then, in late October, on the eve of the U.S. presidential election scheduled for November 5, bitcoin and many altcoins began to rise in value. Bitcoin again approached its all-time high, at one point reaching $73,544. However, the price then retreated slightly to $72,549.
When bitcoin reached its highest point, some investors started taking profits. For example, on the morning of October 29, the Bhutanese government sent about 935 BTC to the exchange, equivalent to ~$66 million.
Along with this, investor interest in Bitcoin-ETFs increased. For example, on October 30, BlackRock's I.B.I.T. trading volume overnight reached a record $3.3 billion over the past 6 months. And the total inflow of Bitcoin-ETFs over the same period amounted to $868 million. The total amount invested in Bitcoin-ETFs reached a record $66 billion.
The results of presidential election forecasts and preliminary polls show that users are placing their main bets on the victory of Republican Party candidate Donald Trump, who is known to favor further introducing cryptocurrencies. Moreover, Trump will make Bitcoin the reserve currency of the United States and the country itself — the cryptocurrency capital of the world. He also promised to appoint a presidential council on cryptocurrencies, which is planned to regulate this sector in the United States.
The expectation of Trump's victory and the steady demand for cryptocurrencies among institutional investors could be some of the main reasons for the growth of Bitcoin at the end of October 2024. In addition, Trump plans to bring in Elon Musk, known for his loyalty to cryptocurrencies, for government work. According to the plan, Elon Musk will have to be in charge of reducing government spending. His possible future department was even jokingly called the "Department of Government Efficiency" (Department of Government Efficiency or D.O.G.E.). — by analogy with Musk's favorite cryptocurrency — Dogecoin)
However, the second scenario is also possible — the victory in the presidential race of the U.S. Democratic Party candidate Kamala Harris. According to Harris' statement, in case of victory, she plans to provide legal protection to crypto investors and encourage innovation in this area. According to analysts at investment firm VanEck, Harris' victory in the U.S. presidential election could favorably impact the crypto market by accelerating the adoption of digital assets.
Other experts believe Harris's victory may hit the cryptocurrency market and cause quotations to collapse. For example, such an opinion is held by analysts of the well-known investment company Bernstein.
A look into the past
If you look at the data for previous electoral periods, you can see that the crypto market's reaction to the U.S. presidential election remains similar. For example 2016, on Election Day, the price of Bitcoin was $703, and ether was $11. Just two months later, the cost of BTC rose to $908. Six months later, the two leading cryptocurrencies on the crypto market were already worth $1172 and $42; that is, relative to the cost on Election Day, their rate increased by 66% and 281%, respectively.
A similar situation occurred after the U.S. presidential election in 2020. If, on the day of the election, Bitcoin and Ethereum cost $13,550 and $383, then after six months, their price rose to $59,397 and $2135, that is, by 338% and 457%, respectively.
The above data shows that the market capitalization of significant cryptocurrencies tends to grow after the U.S. presidential election. This happened even against the backdrop of legal uncertainty regarding regulating cryptocurrencies. Now, the situation is different, as the public is aware of the presidential candidates' plans to regulate cryptocurrencies; this course has already been charted, as evidenced by the adoption of the BTC-ETF and Ethereum-ETF by the U.S. Securities and Exchange Commission (S.E.C.).
It is generally reasonable that cryptocurrency quotes fall during a specific period before the election and rise afterward. This is due to the uncertainty surrounding the regulation of cryptoassets. However, when the election results are known or at least become predictable, the cryptocurrency rate returns to growth. This shows how much of an impact the U.S. market has on the cryptocurrency sector.
What's next for Bitcoin (BTC): expectations and predictions
Options traders are betting that Bitcoin will reach the $80,000 mark by the end of November 2024. Experts at investment company Bitwise also believe that Bitcoin will reach $80,000 by the end of 2024, but under three conditions:
- Donald Trump's victory in the U.S. election;
- A 50 bp cut in the Fed's key interest rate;
- Absence of significant incidents in the crypto industry.
A similar forecast was published in their report by analysts of crypto exchange Bitfinex and management company Bernstein, and this scenario is quite realistic. However, despite expectations, the result of the U.S. presidential election may be different, and it is not known precisely how the price of Bitcoin will react to this.
It also became known about the plans of Gulf investors to add bitcoin to their portfolios as early as 2024. In addition, earlier, the National Bank of Bahrain launched the first bitcoin investment fund in its region, adding positivity to the crypto sector's growth.