Why Bitcoin is Soaring Amid Election Tensions
The U.S. election has traditionally held sway over financial markets, but this year, Bitcoin and other cryptocurrencies are also feeling the heat. With Trump showing early leads in swing states like Georgia and North Carolina,
crypto markets are abuzz, reflecting investor optimism about a potential Trump administration’s favorable stance on digital assets.
Fredrick Collins, CEO and founder of crypto data platform VeloData, points out the connection between Bitcoin’s price spike and Trump’s strong early showing: “Bitcoin is one of the top instruments for trading the election tonight… it’s relatively liquid and very tied to the outcome.” For Collins and many others in the crypto world, it’s clear that Bitcoin’s rally correlates with Trump’s rising election prospects.
The Rise of Ethereum, Dogecoin, and Other Cryptos
Bitcoin isn’t the only cryptocurrency feeling the boost. Ethereum, the second-largest digital currency, rose by 6.5%, while Dogecoin surged a remarkable 18%. Dogecoin’s association with Elon Musk, a prominent Trump supporter, has further fueled its upward momentum.
As Cosmo Jiang from Pantera Capital explains, Dogecoin has benefitted uniquely from Musk’s vocal support and his close ties to the Trump campaign. “Doge, because of its association with Musk, has been a particular beneficiary,” Jiang shares. This rally among altcoins highlights the broader enthusiasm and market sentiment as election results continue to roll in. bitcoin price
Crypto and the U.S. Election: A New Political Power Player?
Cryptocurrency’s influence in this election is unprecedented. Digital-asset companies have poured substantial funding into political action committees (PACs) to advocate for a crypto-friendly agenda. Trump’s vocal support for digital assets has made him a favorite among crypto enthusiasts,
positioning Bitcoin as a “Trump trade” for some investors.
Throughout his campaign, Trump has consistently supported the crypto industry, vowing to make the U.S. a global hub for digital assets, establish a national Bitcoin reserve, and appoint regulators who favor innovation in this space. This alignment with the crypto world sets Trump apart from Harris, who has advocated for a more cautious regulatory approach bitcoin price.
Market Volatility: Is it Here to Stay?
Election-related volatility is sweeping through the markets, and crypto is no exception. Bitcoin’s implied 30-day volatility, measured by CF Benchmarks Ltd., hit a peak level not seen since major political events earlier in the year. This spike in volatility suggests that the market is bracing for large swings as the election unfolds.
Caroline Mauron, co-founder of Orbit Markets, notes that the options market is projecting an 8% fluctuation in Bitcoin’s price post-election. This level of anticipated movement underscores the unpredictable nature of the election’s outcome and its direct effect on the crypto world.
Spot-Bitcoin ETFs: Record Outflows Ahead of the Election
In the days leading up to the election, investors pulled back from Bitcoin-focused ETFs, signaling a cautionary stance. On Monday, the day before voting, Bitcoin ETFs saw an outflow of $579.5 million—a record high. Many investors chose to reduce their exposure,
opting to wait for a clearer election outcome before re-entering the market.
Despite this dip in ETF activity, Bitcoin’s overall performance in 2024 has been exceptional. With a year-to-date rise of over 70%, it has outpaced traditional assets like stocks and gold. The introduction of spot-Bitcoin ETFs from giants like BlackRock and Fidelity earlier this year has brought substantial inflows,
positioning Bitcoin as a mainstream asset.
The Role of Major Financial Institutions
The involvement of prominent financial institutions like BlackRock and Fidelity has bolstered Bitcoin’s legitimacy, helping it draw in around $23.6 billion in net inflows this year alone. The SEC’s grudging approval of these ETFs, spurred by a court ruling,
was one of the most eagerly awaited developments in the crypto sector’s history.
These institutional inflows suggest that Bitcoin is here to stay, transforming from a fringe asset to a key component of the modern financial landscape. As more financial giants continue to support crypto,
the potential for long-term growth and stability increases.
Industry Reactions: What Executives are Saying
Crypto executives are hopeful that the next administration, regardless of the winner, will adopt a more supportive regulatory framework than the Biden administration’s approach. Many within the industry have criticized the current administration for its “regulation through enforcement” stance, which they argue stifles innovation and growth.
Under President Biden, the SEC, led by Chair Gary Gensler, has frequently scrutinized the crypto industry. Gensler’s vocal critiques about fraud and misconduct in digital assets have led to a series of crackdowns,
particularly after high-profile scandals like the collapse of FTX. Many in the industry see Trump’s approach as a breath of fresh air.
What’s Next for Bitcoin?
With a tight election race and no clear winner in sight, Bitcoin’s future remains uncertain. However, the ongoing election results and subsequent policy directions will likely have long-lasting implications. If Trump wins, crypto enthusiasts expect a more favorable climate for digital assets,
while a Harris-led administration could mean a more structured but cautious approach.
Given these circumstances, Bitcoin’s price could experience further swings as investors react to each development. As we move closer to the final election outcome, traders and investors alike should be prepared for potential ups and downs in the crypto markets.
Comparing Bitcoin’s Performance to Traditional Assets
bitcoin price has outperformed traditional investments like stocks and gold this year, driven by the influx of funds into spot-Bitcoin ETFs. This outperformance has marked Bitcoin as an asset class that can hold its own against more established options, appealing to a broader range of investors.
As ETFs become a larger component of the crypto market,
the potential for Bitcoin to maintain its status as a premier asset becomes more attainable. For traditional investors now venturing into crypto,
Bitcoin’s unique ability to serve as both a hedge and a growth asset makes it a compelling choice.
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Conclusion
As bitcoin price hits record highs, the U.S. election continues to underscore its role in modern financial systems. The support Trump offers the crypto world has catalyzed significant market activity, drawing attention to the potential future of digital assets under various political administrations.
While the outcome of the U.S. election will heavily influence Bitcoin’s near-term direction, its recent rise reflects the asset’s growing integration into mainstream finance. As more institutional money flows into crypto and regulatory frameworks potentially become more favorable,
Bitcoin’s position as a premier digital asset seems secure. Regardless of the election outcome, Bitcoin has shown its resilience and adaptability in uncertain times,
a testament to its staying power in the financial world.
