Bitcoin is making headlines as its value rises sharply. Investors believe this surge may indicate expectations of a victory for Donald Trump, the pro-crypto Republican candidate, in the upcoming U.S. presidential election.
Significant Price Increase
In the past week, Bitcoin has increased by approximately 13%. This growth outpaces both global stock indices and gold. Notably, billionaire investor Stan Druckenmiller pointed to cryptocurrency as a signal that markets are anticipating Trump’s return to the presidency.
Trump has pledged to make the U.S. the world’s leading hub for cryptocurrency. As he competes for votes against Democratic opponent Vice President Kamala Harris, his pro-crypto stance has categorized Bitcoin as a “Trump trade,” reflecting a broader trend of investments based on his potential victory.
Shifts in Prediction Markets
The Bitcoin surge aligns with movements in prediction markets, which allow individuals to bet on election outcomes. On the Polymarket platform, Trump’s chances of winning have increased to 60%, while Harris’s odds have fallen to 40%. Similarly, on PredictIt, Trump is given a 54% chance of winning compared to Harris’s 50%.
ETF Inflows
“Excitement in prediction markets is leading to increased volatility and a rise in Bitcoin prices,” said Arisa Toyosaki, co-founder of Cega, a crypto derivatives service. She also noted that substantial inflows into Bitcoin exchange-traded funds (ETFs) are supporting the price increase.
Since October 11, net inflows into a dozen U.S. Bitcoin ETFs have exceeded $1.6 billion. As of 9:32 a.m. Thursday in London, Bitcoin was trading around $67,300, down from its March record of $73,798.
Polling Dynamics
While prediction markets favor Trump, many opinion polls show results within the margin of error as Election Day approaches. According to the Real Clear Politics average, Harris currently leads Trump by about 1.6 percentage points. However, in battleground states, Trump holds a slight edge of less than one percentage point.
Harris’s Position
Harris has taken a balanced stance on cryptocurrency, promising to support a regulatory framework that encourages industry growth while ensuring proper safeguards. This position has generated optimism among crypto traders, especially compared to the Biden administration’s stricter regulations.
Meltem Demirors, General Partner at Crucible Capital, highlighted on Bloomberg Television that the focus on cryptocurrency as a key election issue is drawing significant attention to Bitcoin and the wider crypto market. This growing interest is translating into positive market sentiment, which typically leads to increased investments.
Trump’s Changing View on Crypto
Trump’s recent support for cryptocurrency marks a significant shift from his earlier claims that it was a scam. The digital asset industry has gained influence in the election, with major donations to political action committees aimed at promoting more favorable regulations.
In a Bloomberg Television interview, Druckenmiller remarked that the market appears “very convinced” of a Trump victory, noting its reflection in both bank stocks and cryptocurrency.
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