The impact of the US election on the price of Bitcoin: long-term stability, short-term fluctuation
Historically, the US presidential election had a significant impact on traditional financial markets in the short term. In the months leading up to elections, the stock market usually experiences sharp fluctuations due to investor uncertainty. Interestingly, once the political situation stabilizes, the stock market usually performs better in the year after the election. Other asset classes have also seen this trend, such as gold, as investors seekSafehaven assetsDemand for gold tends to increase during elections, causing prices to soar.
As the cryptocurrency market develops into a multi-trillion-dollar industry, it is increasingly affected by macroeconomic factors, including US political events. The Federal Reserve's monetary policy decisions, such as interest rate changes, continue to have a profound impact on Bitcoin and other cryptocurrencies. Furthermore,Number of people employed in non-agricultural industriesEconomic data often used to measure the Federal Reserve's policies, such as the Consumer Price Index (CPI), may cause significant short-term market fluctuations. Cryptocurrency investors must now view these macroeconomic factors as key elements of their investment strategies.
Cryptocurrency companies have become important political donors in recent years, aiming to influence legislation and regulation that favors the industry. Notably, on the eve of the 2024 US presidential election, the industry donated a record $94 million. Companies such as Coinbase and Ripple Labs donated $20.5 million and $20 million, respectively. The donations aim not only to influence the political views of cryptocurrencies, but also to protect the interests of the industry and promote public relations. Despite controversy, such as the FTX scandal involving the misappropriation of clients' funds, political donations from the crypto industry continue to grow.
Recent events have shown that political developments will have a direct impact on the cryptocurrency market. For example, after the events of former President Trump in July, the price of Bitcoin rose rapidly by 8%. Subsequently, after subsequent events, the price of Bitcoin began to fall, which indicates that political sentiment will affect the price of crypto assets. Similarly, presidential candidate debates and statements can influence market sentiment and may cause significant price fluctuations.
During the 2024 US presidential election, prediction markets such as Polymarket received a great deal of attention. These platforms allow users to bet cryptocurrencies on a variety of election-related outcomes, from candidate success rates to broader political developments. In August alone, Polymarket's trading volume reached a record $0.472 billion, reflecting the high level of participation and interest in political betting. The platform's popularity has drawn the attention of mainstream financial media, further proving its legitimacy as an influential player in the cryptocurrency space.
In summary, while the US presidential election had a profound short-term impact on the cryptocurrency market, its long-term impact was minimal. The real determinants of market performance are still technological advancements within the industry and key macroeconomic indicators. Investors should continue to pay attention to these factors and be prepared for short-term fluctuations that may occur during major political events.