Bitwise Crypto Market Espresso
Bitwise Europe (formerly ETC Group)
Crypto ETPs backed by Crypto Specialists
Trump has likely won the US election. What does it mean for Bitcoin & Cryptoassets?
Key Takeaways
At the time of writing this report, Bitcoin has reached new all-time highs and crypto markets are rallying across the board in anticipation of a more pro-crypto regulatory environment in the US.
Trump is likely to win the electoral college majority as well as the popular vote in the recent US presidential election. At the time of writing the report, Polymarket odds already show a 99% chance and the New York Times estimates a probability of around 93% of Trump winning the presidency.
What is more is that there is a high probability for a so-called “Republican sweep” that includes the presidency, as well as the majority in both the House and the Senate. According to the latest odds provided by Polymarket, this probability currently sits at 92%. Republicans have already officially secured the majority in the senate.
It is quite likely that the final election results will already be called today.
The latest US election results imply that the political sentiment has significantly shifted towards a pro-crypto stance in the US and will likely accelerate the mainstream adoption of cryptoassets as outlined here.
For instance, in the Ohio senate race Bernie Moreno (R) defeated Sherrod Brown (D). Before the elections, Moreno publicly stated that he will defend the crypto industry in the senate and fight Senator Warren’s “war on crypto”. Meanwhile, Brown voted against the repeal of SAB121 earlier this year and has been openly anti-crypto.
At the time of writing this report, the vast majority of elected congressmen and senators in the house and senate are pro-crypto according to data provided by https://www.standwithcrypto.org/races.
Although both presidential candidates – Trump and Harris – have made pro-crypto statements before the election, Trump has made direct promises to the Bitcoin and crypto industry which have even been part of the official programme.
There are several reasons why this is relevant for cryptoassets:
- A more pro-crypto stance among US regulators will likely allow a more diverse set of investment opportunities such as ETFs. There are still several spot crypto ETFs waiting for the SEC’s approval including spot ETFs on Solana, and XRP.
- Cryptoasset service providers will be freer to operate and will likely face less pressure by regulators, i.e. the so-called “Operation Chokepoint 2.0” will likely end.
Moreover, Trump has made several positive election promises, including the following:
- Establish a strategic national Bitcoin stockpile
- Establish favourable regulation to encourage domestic Bitcoin mining (“Bitcoin made in the USA”)
- Install a Bitcoin/crypto advisory council in the first 100 days in office
- Replace SEC chief Gary Gensler who is rumoured to be critical of cryptoassets
Cryptoasset markets have already performed very well in anticipation of these developments.
Nonetheless, the decline in political uncertainty in the US could be the catalyst for a renewed bull run in Bitcoin and cryptoassets as outlined here.
We want to reiterate 2 key observations about US election cycles:
1st observation: Bitcoin has performed relatively well following past US presidential elections in 2012, 2016, 2020, regardless of the winning party.
Bitcoin has generally performed very well following past US presidential elections, regardless of the winning party. It is worth highlighting that bitcoin has exhibited diminishing returns over each of those past election cycles, for example, following the last US election in 2020 bitcoin exhibited a lower overall return in comparison to the previous US election in 2016.
However, on average, Bitcoin has increased by approximately +4,268% after 400 days of the election over the past 3 elections in 2012, 2016, and 2020 respectively.
2nd observation: Past US election events have aligned well with both Bitcoin Halving events and US business cycle troughs, which are likely the main factors behind Bitcoin's stellar performance over the past 3 election cycles in 2012, 2016 and 2020. We have a similar alignment in this cycle.
It is also worth highlighting that Bitcoin’s stellar performance in the past was most-likely not only related to the US election cycles alone but also probably more important macro and coin-specific factors.
US election cycles have generally aligned well with both Bitcoin Halvings which happen pre-programmed approximately every 4 years and also US business cycle troughs shown here as troughs in the ISM Manufacturing Index.
In other words, both supply shocks from the Halving and business cycle recoveries that tend to go hand in hand with an increase in cross asset risk appetite have most-likely contributed to this remarkable performance in the past.
The good news is that we have a similar alignment around this US election event as the latest Bitcoin Halving just occurred on the 20th of April 2024 and the US business cycle also appears to be near its trough based on current readings of the ISM Manufacturing Index. Our previous analyses also imply that the positive effect from the Halving has just started to kick in around August this year and is now becoming an increasing tailwind for Bitcoin.
To put short, Bitcoin would have likely rallied regardless of the outcome of the US election over the coming months.
That being said, a Trump win is likely to accelerate the coming bull run in Bitcoin and cryptoassets.
Bottom Line
Disclaimer
Important Information
The information provided in this material is for informative purposes only and does not constitute investment advice, a recommendation or solicitation to conclude a transaction. This document (which may be in the form of a blogpost, research article, marketing brochure, press release, social media post, blog post, broadcast communication or similar instrument – we refer to this category of communications generally as a “document” for purposes of this disclaimer) is issued by ETC Issuance GmbH (the “issuer”), a limited company incorporated under the laws of Germany, having its corporate domicile in Germany. This document has been prepared in accordance with applicable laws and regulations (including those relating to financial promotions). If you are considering investing in any securities issued by ETC Group, including any securities described in this document, you should check with your broker or bank that securities issued by ETC Group are available in your jurisdiction and suitable for your investment profile.
Exchange-traded commodities/cryptocurrencies, or ETPs, are a highly volatile asset and performance is unpredictable. Past performance is not a reliable indicator of future performance. The market price of ETPs will vary and they do not offer a fixed income. The value of any investment in ETPs may be affected by exchange rate and underlying price movements. This document may contain forward-looking statements including statements regarding ETC Group’s belief or current expectations with regards to the performance of certain asset classes. Forward-looking statements are subject to certain risks, uncertainties and assumptions, and there can be no assurance that such statements will be accurate and actual results could differ materially. Therefore, you must not place undue reliance on forward-looking statements. This document does not constitute investment advice nor an offer for sale nor a solicitation of an offer to buy any product or make any investment. An investment in an ETC that is linked to cryptocurrency, such as those offered by ETC Group, is dependent on the performance of the underlying cryptocurrency, less costs, but it is not expected to match that performance precisely. ETPs involve numerous risks including, among others, general market risks relating to underlying adverse price movements and currency, liquidity, operational, legal, and regulatory risks.
For more details and the full disclaimer visit: https://etc-group.com/resources/disclaimer/etc_group_disclaimer.pdf