The rise of Bitcoin is becoming a focus of the market, partly because some investors believe it indicates that the market expects the Republican candidate, Donald Trump, to win the US presidential election.
According to a report by Bloomberg, legendary investor Stanley Druckenmiller believes that cryptocurrencies are one of the indicators that the market is pricing in a former president's victory. In an interview with Bloomberg TV on Wednesday, he said that over the past 12 days, the market seems to be "very confident that Trump will win", "you can see this in bank stocks, and you can also see it in cryptocurrencies".
Bitcoin has risen about 13% in the past seven days, far outpacing global stock indices and gold.
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In the interview, Stan Druckenmiller stated that he would not vote for Trump or Harris, calling Trump a "blowhard" and believing he lacks the dignity to be president, while also stating that Harris as president would be detrimental to business.
Druckenmiller predicted that even if Harris wins the election, the Democrats are "highly unlikely" to gain control of Congress, and he believes that if a so-called "Blue Sweep" (a Democratic landslide) occurs, the stock market may experience three to six months of difficulty. Druckenmiller also stated that a "Red sweep" is more likely than "Trump winning but the Democrats controlling Congress".
The 71-year-old Druckenmiller, who managed funds for George Soros for over a decade and funded Trump's rival Nikki Haley in the Republican presidential primaries, praised Bitcoin's development over the past decade or so in an interview last year.
Prediction that the market expects Trump to win the presidency
The recent rise in Bitcoin has coincided with changes in prediction markets, which are controversial platforms that allow users to bet on election outcomes. On the decentralized prediction market platform Polymarket, users believe Trump's chances of winning have risen to 58%, while Democratic candidate Kamala Harris has fallen to 41%. On PredictIt, users believe Trump's chances of winning are 54%, while Harris' are 49%.
"The excitement in the prediction markets is driving the surge in implied volatility and the rebound in the spot price of Bitcoin," said Arisa Toyosaki, co-founder of the cryptocurrency derivatives service Cega. "The recent influx of funds into Bitcoin exchange-traded funds (ETFs) has also fueled this rebound."
Since October 11, the total net inflow into 12 US Bitcoin spot ETFs has reached $1.6 billion.
Although the prediction markets lean towards supporting Trump, with less than three weeks until election day, the gap in most polls is within the margin of error. In the national poll average by Real Clear Politics, Harris leads Trump by about 1.6 percentage points. In swing state polls, Trump leads by less than one percentage point.
Meltem Demirors, partner at Crucible Capital, told Bloomberg TV that the emergence of cryptocurrencies as an election issue "means that Bitcoin and the broader crypto asset class are receiving a lot of attention, and this attention is translating into market sentiment, and sentiment - as we know - drives capital flows".
