Crypto Markets Anticipate Volatility Amid U.S. Election

Crypto Markets- The Election Effect: Bitcoin’s Potential Price Growth

Crypto Markets– As the U.S. presidential election approaches on Tuesday, crypto markets are expected to experience heightened volatility. This election could heavily influence price movements in the short term. However, historical patterns suggest that Bitcoin (BTC) may be poised for a significant rally once the political landscape stabilizes.

Historical Election Impact on Bitcoin Prices

Bitcoin, which launched in 2009, is gearing up for its fourth U.S. election. Data from past elections indicates a consistent trend: after each election, Bitcoin’s price has rallied and has never returned to its election-day value. If this pattern holds true, we could see Bitcoin peaking in price within the next year.

Examining Past Election Cycles

1. 2012 Election: On November 5, 2012, Bitcoin traded at around $11. By November 2013, it soared nearly 12,000%, reaching over $1,100.
2. 2016 Election: Fast forward four years; in early November 2016, Bitcoin was priced at approximately $700. It later peaked at about $18,000 in December 2017, marking an increase of around 3,600%.
3. 2020 Election: Following the November 2020 election, which coincided with the onset of the Covid-19 pandemic, Bitcoin surged by 478%, reaching a market high of around $69,000 within a year. It subsequently hit a record of over $73,000 in March 2024.

While each election has resulted in significant price increases, the magnitude of these rallies has diminished over time. The percentage gains between cycles have decreased, with a 70% drop between the first and second election and an 87% decrease between the second and third. If this trend continues, we might expect a 90% decline in the jump from this election, suggesting a post-election rally of approximately 47.8%. This would bring Bitcoin’s price to around $103,500 by the fourth quarter of 2025.

Current Market Valuation and Future Potential

It’s essential to note that Bitcoin is currently undervalued compared to previous cycles. This assessment holds true whether we analyze it from the low of the cycle during the FTX collapse in November 2022 or from the mining-reward halving that occurred in April.

In fact, this cycle has shown the worst performance since the last halving, with Bitcoin sitting only 7% higher than its price when the 50% reduction took effect. This trend further supports the theory of diminishing returns, suggesting that there is significant room for growth in the coming months.

In conclusion, while the immediate future may be uncertain due to electoral outcomes, historical trends indicate that Bitcoin may soon enter a bullish phase. As investors remain cautious in the short term, the potential for substantial price appreciation post-election could provide exciting opportunities for those looking to enter or expand their positions in the crypto market.