As the United States gears up for its presidential election on Tuesday, November 5, 2024, the Bitcoin market is preparing for potential turbulence. In the days leading up to the election, Bitcoin experienced a surge, peaking at $73,620 on Tuesday. This spike likely reflects investor optimism regarding a possible victory for former President Donald Trump. However, by Friday, the Bitcoin price corrected, dropping to $68,830 amidst a more cautious market sentiment as the election day approaches.
Strategies for Trading Bitcoin During the US Election
Alex Krüger, a prominent Argentine economist and crypto analyst, has shared a strategic framework for trading Bitcoin during the US election period. By utilizing his insights, traders can better navigate the market dynamics during this critical time. Krüger’s analysis includes scenarios based on potential election outcomes, suggesting that a Trump victory could propel Bitcoin to $90,000 by the year’s end with a 55% probability. Conversely, a win for Vice President Kamala Harris might result in Bitcoin stabilizing around $65,000 with a 45% probability. Timing, according to Krüger, is crucial: “Expect the move to be fast if Trump wins. Markets rarely wait for laggards on binary events not largely front-run.”
Krüger also highlighted that the current Bitcoin price, which he anticipated to range from $65,000 to $68,000 leading up to election night, has “overshot” due to probabilities favoring a Trump victory. He emphasized the uncertainty surrounding the election results, particularly hinging on the Pennsylvania vote count, which could delay the announcement of a clear winner.
Factors Influencing Bitcoin’s Market Movements
According to Krüger, the timing of results from Pennsylvania plays a pivotal role. “It largely depends on the Pennsylvania count, if it is lopsided or not. It could be as early as Tuesday evening EST, or days later if the count is very tight. The sooner we get clarity, the easier it gets,” he stated. This uncertainty underscores the importance of being prepared for rapid market shifts.
Krüger also expressed a bullish outlook on equities, irrespective of the election outcome, unless an unexpected “Blue sweep” occurs, where Democrats secure both the presidency and congressional majorities. “Equities drag Bitcoin around,” he explained, indicating the interconnectivity between these markets.
Krüger’s Personal Investment Strategy
In his investment strategy, Krüger revealed that he is positioned with long spots in Bitcoin and Nvidia, with plans to go long on Solana (SOL) if Trump wins. This strategy likely anticipates a spot Solana Exchange Traded Fund (ETF) approval in the United States. Krüger’s analysis suggests that the market has partially priced in a Trump victory, expecting that a Trump administration could boost Bitcoin’s value. “Markets have partially priced a Trump victory in. We (the market, in aggregate) expect Trump to drive crypto prices higher due to increased regulatory clarity and implementation of pro-crypto policies,” he noted.
Impact of Election Outcomes on the Market
Additionally, Krüger anticipates that Trump’s focus on increased government spending could stimulate short-term economic growth, positively impacting equities—a sector closely linked to Bitcoin’s performance. On the other hand, a Harris victory might signify a continuation of current policies, barring a significant Democratic sweep. Krüger concluded: “Based on betting markets and various election forecasting models, Trump’s probabilities are in the 50% to 63% range. Ergo, it’s ‘safe’ to assume a GOP victory is far from being fully priced in. Such a contested setup is common going into elections. That is why I do not expect ‘sell the news’.”
At the time of writing, Bitcoin was trading at $70,402, reflecting the market’s continued anticipation and uncertainty as the election draws nearer.
