History Suggests Crypto’s Bullish Momentum Should Continue Into the U.S. Election and Afterwards

As a seasoned researcher with over two decades of experience in financial markets, I have witnessed numerous economic cycles and shifts that have reshaped the global economy. The current crypto market dynamics are particularly intriguing due to their unique characteristics and rapid evolution.

As the U.S. presidential election draws near, happening on November 3, investors and traders are strategically arranging their positions in anticipation of post-election events and the potential impact of a newly elected administration on financial markets, including cryptocurrencies.

Over the last seven days, cryptocurrencies have shown a positive trend. This upward movement might be attributed to several factors such as economic stimulus measures in China, interest rate reductions by central banks in the West, and the approaching U.S. elections which seem to be gaining more clarity.

Although cryptocurrencies gained significant attention during just one previous presidential election (2020), historically, the latter half of October often signals a positive trend in financial markets, such as stocks. Therefore, the recent behavior of cryptos might not be surprising given this pattern.

It’s interesting to note that, based on data from Coinglass spanning from 2013 to 2023, the latter half of October (October 16th – 31st) tends to yield double the returns compared to the first half (October 1st – 15th) for Bitcoin (BTC).

Election effects

As an analyst, I’ve observed that data from ETC Group, a division of Bitwise Asset Management, reveals a significant volatility in cryptocurrency token prices in relation to the outcome of elections.

By comparing Bitcoin’s performance against a hypothetical value, ETC Group determined that Bitcoin could potentially swing by as much as 10% due to the election results. With its current price hovering around $68,000, a 10% increase would break the record high set in March at $73,697. Moreover, they predicted that the impact of the election might have the most significant influence on Cardano (ADA) and Dogecoin (DOGE), possibly leading to an 18% rise for ADA and a 20% jump for DOGE.

Moreover, data from Ycharts, spanning presidential election years dating back to 1950, indicates a common pattern where the stock market usually experiences a downturn in September or October and then rebounds into November. Interestingly, this trend seems to be mirroring our current situation as both the S&P 500 and Nasdaq have been on an upward trajectory since early last month.

After the U.S. election, the options market indicates a positive outlook towards Bitcoin. Most of the call open interest is concentrated at the $70,000 and $80,000 price levels. These price points represent potential payouts of approximately $141 million and $120 million respectively for the options expiring on November 29th.

On December 27th, there’s a stronger tendency for prices to rise (bullish), as indicated by the large volume of call options with a strike price of $100,000, which amounts to over $620 million in potential value based on Deribit data.

In simple terms, according to Geoffrey Kendrick, global head of digital asset research at Standard Chartered, as the US election nears and Trump seems likely to win, there’s an increasing possibility that the broader digital asset industry will become mainstream. Even Joe Biden’s running mate, Kamala Harris, appears acceptable from a digital asset standpoint.

“For BTC this means a bleed up towards the all-time high of $73,000 looks likely pre-election.”