Bitcoin is making headlines as it experiences a surge in the markets, with many investors interpreting this as a signal of a potential victory for pro-crypto candidate Donald Trump in the upcoming US presidential election. Over the past seven days, the digital asset has seen a 13% increase, outperforming global stocks and gold. Billionaire investor Stan Druckenmiller has pointed to the rise in Bitcoin as one of the indicators that suggest markets are predicting a win for the former president.
Trump, who has expressed his intention to establish the US as the crypto capital of the world, is in a close race against Democratic candidate Vice President Kamala Harris. His support for the cryptocurrency sector has led to Bitcoin being categorized as a “Trump trade,” reflecting the speculation on his return to the White House.
The surge in Bitcoin prices coincides with changes in prediction markets, where individuals can place bets on election outcomes. Platforms like Polymarket and PredictIt have seen a shift in Trump’s odds, with an increase to 58% and 54% respectively, while Harris’ chances have decreased.
According to Arisa Toyosaki, co-founder of Cega, the excitement in prediction markets has resulted in increased implied volatility and a rally in Bitcoin prices. Additionally, significant inflows into Bitcoin exchange-traded funds have contributed to the surge in prices, surpassing $1.6 billion since October 11.
Despite the movement in prediction markets favoring Trump, national polls show a tight race between him and Harris, with less than three weeks until Election Day. While Harris has taken a more supportive stance towards crypto, emphasizing the need for a regulatory framework and industry growth with appropriate safeguards, Trump’s position has evolved from previously dismissing crypto as a scam to embracing the sector.
The attention on crypto as an election issue has brought focus to Bitcoin and other digital assets, translating into sentiment that influences market flows. Druckenmiller noted the market’s confidence in a Trump victory based on the performance of bank stocks and crypto assets in recent days.
As the US presidential election approaches, the outcome remains uncertain, with both candidates vying for support from various sectors, including the cryptocurrency industry. The market’s reaction to the election will continue to be closely watched as investors navigate the implications of the results on different asset classes.
