U.S. Election 2024 - Analysts Weigh In On Bitcoin

U.S. Election 2024 - Analysts Weigh In On Bitcoin

As the results of the 2024 election in the United States nears, analysts sit on both sides of the fence - some predicting that the outcome could significantly influence Bitcoin's market behaviour, with its price currently hovering around $70,000. Others warn that the importance of the election is overstated. We explore both sides…

Bitcoin's value might experience notable fluctuations based on whether former President Donald Trump or Vice President Kamala Harris wins the race. Volatility is not an unknown trait of the digital asset, with many analysts noting that the election could temporarily impact cryptocurrency sentiment and, thus short-term prices.

Bitcoin's current valuation reflects cautious optimism in the market, as it recently reached a high of over US$73,000. At the time of writing, the price has retraced to US$69,358, with many ‘waiting’ for the election result before placing their bets for what direction the market heads for the remaining stages of 2024.

Trump's Pro-Crypto Approach

If Trump wins, many are projecting Bitcoin may rise to $80,000–$90,000 by year’s end, surpassing the previous all-time high of approximately $73,800 set in March at the start of the year. Trump’s campaign has taken a pro-crypto stance, with backing from notable figures in the crypto world, such as Marc Andreessen and the Winklevoss twins. His alignment with Bitcoin advocate JD Vance as a running mate further underscores his support for the crypto industry. Trump has gone so far as to suggest that Bitcoin could become a strategic U.S. reserve. Trump also pledged to end what he termed the Biden-Harris administration's "anti-crypto crusade" and to support the cryptocurrency industry with favourable regulations.

Harris's Regulatory Challenges

On the other hand, a Harris victory might push Bitcoin down to a critical support level of $50,000, a 25% drop from its current price. Analysts are linking this potential decrease to the Biden administration’s regulatory scrutiny of the crypto sector, which could fuel concerns over the industry's future under a Harris presidency. Whilst Harris has not made any explicitly anti-crypto statements, many expect ‘more of the same’, with the SEC scrutinising the industry with a keen eye. From Harris, “We will encourage innovative technologies like AI and digital assets while protecting our consumers and investors."

Long-Term Perspective

Lyn Alden put it best in her October 2024 newsletter -

“The U.S. election is obviously the biggest near-term catalyst to watch, since it has implications for some of the other catalysts listed below, plus more.

In general, I think investors tend to overstate the importance of presidential elections on broad investment outcomes, but certainly there are sizable differences around the margins depending on the Presidential and Congress make-up.

My highest conviction bet regarding the outcome is that despite all the social and fiscal differences between the candidates, nothing stops this train (structurally high fiscal deficits):

And thus I remain of the view that the economy will operate via fiscal dominance more-so than monetary dominance, although there will be ebbs and flows along the way as described by the next two catalysts.

In some interviews recently, I’ve been asked about some presidential proposals, and have pointed out that since they have to get through Congress, I generally rule out the tail outcomes unless I see them start to materialise. So for example the idea of replacing all income taxes with tariffs, or adding in unrealised capital gains taxes, are pretty tall orders to get through Congress within this four-year period even though they have been proposed by the leading candidates, and thus I down-weight them vs some of the other proposals that have a greater likelihood of being enacted.”

Market Trends and Bitcoin’s Prospects

Standard Chartered analyst Geoff Kendrick adds that if Harris wins, Bitcoin could settle around $75,000 by year-end, while a Trump win might propel it to $125,000. However, analysts caution that Bitcoin's pricing remains challenging to predict, influenced more by market sentiment than traditional metrics.

Bitcoin Prices and Election Odds Correlation

Recently, Bitcoin’s price has shown a correlation with Trump’s odds on blockchain-based betting platforms, achieving a seven-month high as Trump’s election prospects peaked. Conversely, an increase in Harris's election odds has coincided with Bitcoin price declines, indicating that investors are carefully tracking election trends as they consider their moves in the crypto market.

With a short wait until we have certainty over which candidate will date the White House in 2025, ensure you are well prepared for each outcome – whether that be an opportunistic ‘buy the dip’ or a strong rally into the years-end.