I have often wondered what impact the US presidential elections have on the cryptosphere. Let's be honest since 2016 US elections have been bigger news than normal. They have become a huge global fixation, or circus perhaps depending on your take, thanks to former businessman and television celebrity Donald Trump entering US politics.
Sometimes politics and markets can have no immediate or direct interaction with each other. Whereas other times they can profoundly influence one another. As we all know markets like stability, it's one of the golden rules for markets to flourish. But since 2016 the world has become increasingly turbulent. What happens in the US affects the world, particularly economies and markets, there is no escaping that fact.
So how exactly does US politics affect or not affect the world of crypto, particularly Bitcoin? Go back to 2020, remember that US general election? Let's be honest it's hard to forget that one! So during the election campaign Bitcoin started to move vertically, this was some five months after the 2020 halving.
(Bitcoin price chart from inception, from CoinMarketCap.com.)
US Presidential Election 2020
On September 5th 2020 Bitcoin was trading at $10,500, two months before the US election. One month later Bitcoin has barely moved and is still sat at the $10,500 mark. However, shortly into October 2020 things start to change.
By the 15th October Bitcoin has begun a vertical move to $11,435. By October 26th it's at $13,000. We are now just over a week away from the election.
On 1st November 2020 Bitcoin has climbed to $13,778, six days later and three days after the election on the 7th November Bitcoin has hit $15,548.
It seems that Bitcoin was getting excited in the hope that the world would now know who the next US president would be, and with it a sense of stability would return again and we would all move on. However, as we all know that did not happen.
The US election was contested by Donald Trump all the way to the swearing in ceremony of Joe Biden. Trump never accepted the result of the election.
By the 30th November 2020 Bitcoin is trading at $18,000. So while the frenetic court hearings and protestations from Donald Trump continued it seems that Bitcoin was still gaining confidence. Move onto December 17th and Bitcoin is at $21,000. It's looking increasingly likely that Biden is going to be in the White House and any appeals by Trump's team will not succeed. Bitcoin's price continues to move vertically throughout the rest of December 2020.
(Bitcoin price chart during 2020 US presidential election and beyond, from CoinMarketCap.com.)
By January 3rd and only days away from the swearing in of Joe Biden Bitcoin hits $32,163, it has completely broken out and is in a very bullish mood. Come mid January and Biden starting his presidency the price of Bitcoin has hit $37,500. This vertical movement continues into February and March 2021, Bitcoin excels to new heights reaching an unbelievable new all time high of $63,179 in April 2021.
Markets like stability, crypto markets clearly have parallels when it comes to growth. Bitcoin performed strongly in the build up to the last US presidential election. Bitcoin isn't performing as well right now in this build up to the US election but it is performing well, it is clearly gaining strength and building on gains as it keeps trying to move toward and test that $70,000 mark. The price pattern does not mirror the 2020 US election performance but there is clearly a resemblance.
Despite all of the chaos and uncertainty of the last American election during that interim period between election and the crowning of the next president, once Bitcoin sensed that a winner had been decided and was going to be installed as the president of the US it went from strength to strength.
US Presidential Election 2016
So let's take a look at what happened in 2016. At the start of September 2016 Bitcoin is trading at $575. By the 10th October Bitcoin is up to $610, a modest climb. By the 2nd November Bitcoin has hit $730 and by the 1st December it has reached $746. By the end of December 2016 Bitcoin is trading at $960, a staggering climb of 32%.
This upward trend continues all the way through 2017 and by December 16th 2017 Bitcoin has hit a new all time high of $17,760 and an altcoin season is well underway. The bull market would continue into 2018 up until February of that year when things began to move downwards and we started a new bear.
(Bitcoin price chart during 2016 US presidential election and beyond, from CoinMarketCap.com.)
The 2016 US presidential election was also another tumultuous election with Hillary Clinton expected to defeat her opponent Donald Trump. She didn't and Trump won. This caused an upset to the status quo but regardless of the politics Bitcoin was not affected negatively, on the contrary it seems.
Again the same pattern emerges. Once the winner had been confirmed Bitcoin moves vertically, once Trump is installed in the White House Bitcoin's vertical trajectory continues to, what was then, unprecedented levels and new all time highs.
It's also important to note that Bitcoin started to move a few months after the halving of 2016 which took place in July that year, just as it did a few months after the halving of 2020.
So while in this election we are not witnessing Bitcoin making big price climbs as in previous US election cycles, not yet anyway, nonetheless there is clearly a buoyancy in Bitcoin. At the moment Bitcoin climbs then pulls back and then repeats. It looks and feels like it is gearing up.
The performance of Bitcoin in the US election of 2016 is strikingly similar to its performance in the 2020 election, just on different scales. So what can we expect of this election? As I have already mentioned we are already seeing parallels just not in the same way as 2016 and 2020.
If I were to be bold for just a moment I would say that as soon as we all know who is going to be the next US president cryptoland could very well get a lot more interesting. Some investors and traders are speculating that Bitcoin could hit $80,000 soon after the election irrespective of who wins it. Now that would be a great thing, wouldn't it?
Peace!