In light of the upcoming U.S. election, it is worth looking at how Bitcoin has been affected by past elections. In the past, there have been notable changes in U.S. stocks around elections. Given Bitcoin’s correlation with equities and, most notably, the S&P 500, these trends could offer insights into what might happen next.
S&P 500 Correlation
Bitcoin and the S&P 500 have historically held a strong correlationThis is especially true during BTC bull cycles, and when there’s a high risk of volatility in the traditional markets. This could phenomenon could potentially come to an end as Bitcoin matures and ‘decouples’ from equities and it’s narrative as a speculative asset. But there is no concrete evidence that it’s the case.
Post Election Outperformance
The S&P 500 has typically reacted positively following U.S. presidential elections. The stock market has often experienced significant gains following elections in recent decades. This pattern has been consistent over the past few decades, with stock markets often experiencing significant gains in an election year. S&P500 vs Bitcoin YoY Change chart we can see when elections occur (orange circles), and the price action of BTC (black line) and the S&P 500 (blue line) in the months that follow.
2012 Election: In November 2012, the S&P 500 saw 11% year-on-year growth. The growth rate jumped to about 32% one year later.
2016 Election: In November 2016, the S&P 500 was up by about 7% year-on-year. The S&P 500 increased approximately 22% one year after the election.
2020: Elections in 2020 continued the pattern. The S&P 500’s growth was around 17-18% in November 2020; by the following year, it had climbed to nearly 29%.
What is the latest phenomenon?
The data is not limited to just the three previous elections when Bitcoin was around. To get a larger data set, we can look at the previous four decades, or ten elections, of S&P 500 returns. One year only had a negative return twelve months after election day. That was 2000, when the dotcom bubble burst.
The data shows that the party winning doesn’t have a significant impact on these market trends. The upward trend is more about eliminating uncertainty and increasing investor confidence.
What will Bitcoin do this time?
Bitcoins’ potential performance is tempting as we get closer to the U.S. Presidential election in 2024. Price increases could be significant if historical trends continue. Consider the following:
Bitcoin’s value could increase to more than $1,000,000 if the price of Bitcoin increases by the same amount in the following 365 days as it did in 2012. The same thing that happened in 2016 could lead to an increase of around $500,000. A similar scenario to what we saw in 2020 would see the price rise to $250,000 BTC.
This is interesting because each time the returns have decreased by 50%. So maybe $125,000 for November 2025 would be a reasonable target, particularly since the price and the data are in line with the middle bands. Rainbow Price Chart. It is also important to note that Bitcoin has actually experienced higher gains in each of these cycles!
The conclusion of the article is:
According to the data, the time period immediately following an American presidential election tends to be bullish both for the stock exchange and Bitcoin. There are less than two month until the next Bitcoin investors have good reason to expect a positive outcome in the coming months.
Here is a video that will give you a closer look at this subject. Will The U.S. Election Be Bullish For Bitcoin?
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Source: bitcoinmagazine.com