Author: Luo Tuo Finance
There is only one week left before the election.
The US presidential election is approaching, and as of the afternoon of October 27 local time, more than 41 million voters nationwide have already cast their ballots for the 2024 presidential election. As a result, the cryptocurrency market has also become increasingly volatile, and under the "election trade" stimulus, BTC has taken the lead in launching an upward trend, returning to the long-lost $71,000 level this week, with the cryptocurrency sector generally rising, and the MEME market even immersed in PolitiFi.
Returning to the two candidates, Harris and Trump are becoming increasingly entangled. Due to the poor handling of the "Milton" hurricane and the conflict between Iran and Israel, Harris' approval rating has plummeted, and Trump has successfully overtaken him, not only continuing to expand his advantage in betting odds and swing state polls, but also closely catching up in traditional general polls. From the current situation, Trump seems more likely to become the next US president, and the "Trump trade" is therefore about to be triggered.
Reviewing the policy strategies of the two, the overall direction is to use government subsidies as a starting point, with the core purpose of driving capital inflows, but the two have slightly different approaches. Trump uses tax cuts to promote the development of private enterprises, while Harris tends to directly distribute money to subsidize residents, and the capital inflows are also different. Harris inherits Biden's governing ideas, focusing on key core industries such as chips and new energy, while Trump still adheres to the aggressive tariffs and "America First" proposition.
In the current situation, Trump's winning rate is higher, and the financial market is naturally more focused on his policy proposals. Specifically, citing the views of CICC, Trump's main governing directions include domestic tax cuts, increased tariffs on foreign countries, relaxed regulation, expulsion of illegal immigrants, encouragement of fossil energy, emphasis on technology, and foreign policy isolationism. The cumulative impact of these governing directions may bring upward inflation risks, which may lead the Federal Reserve to take measures to slow the pace of interest rate cuts and control a higher terminal interest rate. From the capital market perspective, if economic resilience is maintained, a soft landing would be beneficial to US stocks, cyclical commodities and BTC, but in extreme cases, inflation would suppress the capital market, and anti-cyclical commodities such as gold would benefit.
Estimation of the impact of Trump's policies on the US economy, source: CICC ResearchHere we can refer to the 2016 US election, when the market also triggered the "Trump trade", especially after his victory in November 2016, when optimistic expectations suddenly rose. US bond yields rose from 1.7% to 2.6% within a month, and the US dollar index also broke through 103 from 97. Looking at US stocks, the three major indices rose by 10% during this period, and looking at commodities, inflation expectations drove copper and crude oil to surge, while gold reversed and fell 3% within a month after the election.
Source: Bloomberg, CICC Research DepartmentIt is obvious that Trump's victory in 2016 can be described as a black swan event, but currently the capital market has already priced in his potential victory. The most prominent asset is undoubtedly cryptocurrency. Since Trump has repeatedly spoken out in public for cryptocurrency, and has recently launched a family cryptocurrency project, the cryptocurrency market has high expectations for him.
From the cryptocurrency prediction market Polymarket, the betting amount has exceeded $2.1 billion, and Trump's winning rate has reached 66.2%, far exceeding Harris by 33 percentage points, and the gap is still widening. The BTC market has responded strongly to this, and with the approach of the election, BTC has continued to rise, currently reaching above $71,000, and the expectation is undoubtedly one of the reasons for the rise.
How will BTC and the cryptocurrency market perform before and after the election? Major institutions and analysts have also had heated discussions on this.
Traders generally believe that the election is an important trading opportunity, and many have bet on the post-election rebound. According to Matrixport data, the US election is igniting market sentiment, with the funding rate of ETH perpetual futures reaching the highest level since May 2024, and the strategy of buying the dips is prominent.
Top trader Eugene Ng Ah Sio also commented on social media that the positioning has been basically clear, and the upward trend will be opened after the election, and he also emphasized that the speculative long positions in October have basically been wiped out, and most people will avoid risks in the week after the election, and SOL is the clear asset choice.
Derivatives have also reached similar conclusions. Deribit CEO Luuk Strijers said that derivatives traders are laying the groundwork for a bullish trend in BTC in the days after the US election on November 5. For options expiring on November 8, the value of open interest exceeds $2 billion, with the main strike prices at $70,000, $75,000 and $80,000, and a put/call ratio of 0.55, indicating that the number of open call options is twice the number of put options. Compared to Mark IV, Forward IV has a clear increase, especially during the election cycle, indicating that traders expect volatility to be higher. The forward implied volatility is 72.29%, indicating that the price may fluctuate by about 3.78% in the days after the presidential election. Compared to put options, the demand for call options is strong, and investors are not too concerned about managing downside risks.
Institutions also hold a more optimistic attitude. Just half a month ago, Standard Chartered Bank, which has long been dubbed outrageous by the market, stated that BTC is showing strong upward momentum and may approach the historical high of $73,800 on the day of the US election, and believes that the factors driving the rise of BTC include the steepening of the US Treasury yield curve, the inflow of funds into spot BTC ETFs, and the increased likelihood of a Trump victory. Looking at the current BTC price, Standard Chartered may be right for once.
VanEck's digital asset research director Matthew Sigel also made a forecast in an interview, saying that investors are preparing for the US election, and mentioned that this election will follow a similar path to 2020, with a short-term volatility spike after the winner is announced, and then BTC will start to rise, and Trump's winning rate is higher. Bernstein also reiterated that if Trump wins the US election next month, the price of BTC may reach a new historical high of $80,000 to $90,000.
Regarding this, hedge fund manager Paul Tudor Jones said that one should not be limited to the presidential candidate, and he believes that regardless of who takes the presidency, the policies adopted will be "many roads lead to inflation", which will further drive up the prices of BTC and other commodities.
Bitfinex has also added a quarterly factor based on the election, believing that BTC will experience turbulence in the coming weeks, with the uncertainty of the election, the "Trump trade" narrative, and the historically favorable fourth-quarter conditions creating a perfect storm for market trends. Bitfinex's report shows that the premiums on options expiring around key election dates are higher, and implied volatility is expected to peak around November 8, just after the election, while historically the fourth quarter of the halving year has ended with a bullish trend, with a median quarterly return of 31.34%, which may drive BTC to reach or even exceed its all-time high after the election.
Of course, although most institutions and traders are bullish, there are also analysts who believe that betting on short-term volatility is short-sighted. Jean Boivin of the BlackRock Investment Institute mentioned that the market is underestimating the risk that one of the US presidential candidates may dispute the election result next month, and a contested election victory usually leads to a legal battle lasting for weeks, which will also affect risk assets.
Copper analysts directly pointed out that the market may be at a temporary top before the US election, as according to Bitcoin on-chain data, 98% of short-term holders' wallet addresses are now in profit. Historically, when this ratio rises significantly, investors tend to lock in profits, leading to rapid selling pressure.
Looking at the entire crypto market, it can be seen that market sentiment remains unchanged, but the macroeconomic factors affecting the performance of cryptocurrencies are shifting from monetary policy to the results of the US election. The crypto market is more favorable towards a friendly Trump, and Trump's policy proposals will also to some extent boost Bitcoin and related US stocks, so in the forecasts of many analysts, Bitcoin is expected to break new highs in this trading cycle.
Even excluding the crypto sector, in other financial sectors, the market has been signaling similar signs since the increase in the probability of Trump's victory in September. Given Trump's more aggressive tariff policy, he has stated that he may impose a uniform 10% baseline tariff on all goods entering the US, and impose 60% or higher tariffs on China. Recently, the renminbi, Mexican peso, and Vietnamese dong have weakened. In the traditional energy sector supported by Trump, according to data from Citic Research, the oil and gas energy index has surged 5.8% since September 26, while the clean energy index has plummeted 9.4%. In social media, the Trump Media & Technology Group (DJT) has surged an astonishing 289.79% since September 23, indicating a clear betting trend.
Of course, this currently only reflects the market's pre-election trading, and expectations are an important part of the current situation, but this means that expectations have also been taken into account, and there is a high probability of a short-term pullback after the expectations are realized. On the other hand, even if Trump takes office, his policies will have to consider the dominant fiscal policy of the House of Representatives, otherwise he will face the same policy constraints as Biden. However, according to the latest poll by the veteran political observation website 538 (fivethirtyeight), Trump's chances of winning the presidential election this year have risen to 53%, the Republican Party's chances of taking the Senate majority from the Democrats are 87%, and the Republican Party's chances of maintaining the House majority are 53%, further increasing the chances of a Republican sweep.
In any case, violent fluctuations before and after the US election are inevitable, and any group betting on trading opportunities should remain vigilant. For the election, the winner is never certain until the very end, and even after the voting is completed, the debate over the validity of the results will not cease.
During this period, the most active cryptocurrencies in the market may only be and .
