Contrary to popular belief, there is no strong positive correlation between Bitcoin’s (BTC) recent price movements and the increasing chances of Republican candidate Donald Trump winning the U.S. presidency, according to market data. Since mid-June, when Trump met with Bitcoin miners, crypto market analysts have frequently linked the candidate’s performance in betting markets to fluctuations in Bitcoin’s price, which at the time of writing hovers just above $58,600 BTCUSDT on Gate.io.
This narrative gained traction after Trump survived an assassination attempt in July and as Bitcoin faced downward pressure earlier this month amid a resurgence in betting markets favoring Democratic candidate Kamala Harris.
However, an analysis conducted by prime broker firm, which examined the three-day changes in Bitcoin’s price and the three-day changes in Polymarket odds of Trump’s election victory from June 1 to August 15, reveals no consistent trend or clear correlation between the two factors.
Is There a Connection?
The head of research at the firm, explained that there has been no significant relationship between election odds and Bitcoin prices during the analysis period from June 1 to August 15, 2024. He suggested that the weaker-than-expected relationship could be attributed to various factors influencing prices, such as the direction of U.S. monetary policy, concerns about upcoming supply surges, and other factors previously highlighted.
Some of these influencing factors, including aggressive selling by the German state of Saxony and fears of a potential supply glut from the creditors of the defunct exchange Mt. Gox, have reportedly limited Bitcoin’s price gains since June, overshadowing changes in Republican election odds.
Nevertheless, with Harris now making strides in the crypto space, the upcoming election could still become a significant driver of Bitcoin prices. Experts also mention that as election day approaches, it will be intriguing to see if prediction market data begins to reveal election news as a primary or even dominant influence on Bitcoin’s price movements.
The More Pro-Crypto Candidate
In the 2024 U.S. presidential election, both Donald Trump and Kamala Harris have taken distinct approaches to cryptocurrency, reflecting their broader political ideologies and goals.
Donald Trump, who was once a vocal critic of cryptocurrencies, has made a notable shift in his stance. During his 2024 campaign, Trump has positioned himself as a strong supporter of the crypto industry. He has outlined a plan to establish the U.S. as a global leader in cryptocurrency by proposing the creation of a Bitcoin and crypto advisory council to provide clear regulatory guidance. Trump has also expressed strong opposition to Central Bank Digital Currencies (CBDCs), arguing that they threaten financial freedom and privacy. Furthermore, he has pledged to fire SEC Chair Gary Gensler on his first day in office, criticizing the current administration’s regulatory actions against the crypto industry. This pro-crypto pivot is part of Trump’s broader strategy to appeal to the tech-savvy and libertarian-leaning segments of the electorate (Coinpedia Fintech News) (Cryptomaniaks).
On the other hand, Kamala Harris has adopted a more cautious and balanced approach to cryptocurrency. While her stance is not as aggressively pro-crypto as Trump’s, she has made efforts to repair the strained relationship between the Democratic Party and the crypto community. Harris’s campaign has engaged in dialogue with major crypto companies like Coinbase and Ripple, signaling a willingness to consider more constructive regulatory policies. However, Harris faces internal party dynamics, with some Democrats advocating for stricter regulations, making her approach more nuanced. Her strategy involves striking a balance between fostering innovation in the crypto space and ensuring consumer protection, reflecting a more moderate and consultative approach compared to Trump (Coinpedia Fintech News) (Kitco).
By the looks of it, Trump is seen as the more crypto-friendly candidate with a clear and aggressive pro-crypto agenda, while Harris, though open to dialogue with the industry, is more cautious and is trying to navigate the diverse views within her party. This difference in approach could significantly influence the future regulatory landscape of cryptocurrencies in the U.S. depending on the election outcome.
Harris Wins on Polymarket
Over the past weekend, Polymarket traders actively engaged in betting on the 2024 U.S. presidential election, causing significant shifts in the perceived odds. Kamala Harris’ chances of winning the election dropped by nearly 8 percentage points, briefly resulting in a tie with Donald Trump. However, by Monday morning, U.S. time, Harris had regained a 4-point lead.
One explanation for Trump’s resilience in the market, despite polls increasingly favouring Harris, is that some traders may still be operating on outdated assumptions from the time when President Joe Biden was expected to be the Democratic nominee instead of Harris.
It’s also worth noting that Polymarket, which officially prohibits U.S. residents from participating, initially showed a substantial premium for Trump. This has led some to question the platform’s accuracy, given that the actual voters are excluded from the market. Meanwhile, another prediction market, PredictIt, which operates with the approval of U.S. regulators, currently shows Harris with a more significant lead over Trump.
However, prediction markets are not without their flaws. For example, in 2016, PredictIt gave Hillary Clinton an 82% chance of defeating Trump, which did not happen, and only a 16% chance that Brexit would occur, which it did, as polls closed in the U.K.
