Donald Trump’s rising chances in the upcoming presidential election are helping bitcoin’s price come back close to its all-time high.
Bitcoin’s price is up 11.5 per cent in the last ten days, and 26 per cent from its seven-month low in September.
This surprise spike has seemingly come out of nowhere, but there is a simple reason: Trump.
Trump’s chances of winning the US presidential election next month have ticked up over the last month, going from a 36 per cent chance of a win in mid-September to above 50 per cent now, according to the ABC News election model.
Predictions of a Trump victory have become so correlated with bitcoin that analysts have started forecasting price predictions based on whether he wins the election.
“We expect bitcoin to claim back new highs, in case of a Trump win and by Q4, we expect bitcoin to reach close to $80,000-$90,000 range,” says Bernstein Research last month.
“However, if Harris wins, we expect bitcoin to break the current floor around $50,000 and test the $30,000-$40,000 range, which it was when the bitcoin ETF momentum started in Q4′2023.”
So why has this relationship developed?
Trump and bitcoin: A complicated relationship
Trump’s chances of winning the 2024 US election have started to become closely correlated with bitcoin for a variety of reasons, but primarily because of the evolution of his position on the cryptocurrency.
In the past, Trump described the digital currency’s value as “based on thin air” and claimed that bitcoin was “a scam”.
Now, the former president is all in on crypto, pledging to start a bitcoin reserve and make the US the ‘crypto capital of the planet’, as well as even launching his own non-fungible tokens (NFTs).
Trump has also received a significant amount of support from billionaire businessmen like Elon Musk and the Winklevoss twins with close ties to the crypto industry.
“Investors might be trying to second-guess the election outcome and increase their exposure to the cryptocurrency ahead of the actual result, hoping bitcoin will go to new highs if there is a new leader of the country actively in favour of the asset,” said Russ Mould, investment director at AJ Bell
The other key factor in bitcoin’s correlation with Trump’s chances has been its similarity with gold as an asset class.
Gold typically attracts investors’ attention when they are looking for a store of value during uncertain times, and Trump’s victory promises plenty of uncertainty.
Fears of a trade war and larger budget deficits than under Harris have also left markets worried over potentially high volatility and increasingly inflation, both of which would leave the ‘safe haven’ of gold, and even bitcoin, looking potentially attractive.
“It’s interesting that the bitcoin price has been volatile in recent weeks, suggesting that some investors and traders might be waiting for a stronger signal that Trump will win before going all-in on the digital currency,” added Dan Coatsworth, investment analyst at AJ Bell.