Bitcoin has risen by about 13% in the past seven days, far outperforming global equity indices and gold. The attention to Bitcoin's rise is partly due to some investors believing that the rise of Bitcoin indicates the market's anticipation of Republican candidate Trump, who supports cryptos, winning the US presidential election. Billionaire Stan Druckenmiller believes that cryptos are one of the indicators the market is pricing in for the former president's victory.

In a fierce competition with Democratic candidate Harris, Trump has vowed to make the USA the global capital of cryptos. His support for the industry has led Bitcoin to be categorized under the so-called 'Trump trade,' one of a series of bets predicated on his return to the White House.

Alongside Bitcoin's rise, there have been shifts in the prediction markets. On the Polymarket platform, Trump's chances of winning have surged to 58%, while Harris has fallen to 41%. On the PredictIt platform, Trump's chances of winning are at 54%, compared to Harris's 49%.

ETF inflows

Arisa Toyosaki, Co-founder of crypto derivative service provider Cega, said: 'The excitement in the prediction markets leads to'Implied volatilityWith high prices persisting, Bitcoin spot prices rebound. Recently, a significant inflow of funds into Bitcoin Exchange-Traded Funds (ETFs) has also fueled this upward trend.

Since October 11, the net inflow of over 1.6 billion US dollars has been recorded in more than ten Bitcoin ETFs in the USA.

Despite market predictions favoring Trump, with less than three weeks until Election Day, most polls show a margin of error. In the national average polls from Real Clear Politics, Harris leads Trump by about 1.6 percentage points. In battleground state polls, Trump leads by less than one percentage point.

Harris's Position

Harris has taken a nuanced stance on cryptocurrencies, pledging to support a regulatory framework for digital assets and backing industry growth under appropriate safeguards. Her stance has boosted optimism among crypto traders, contrasting sharply with the crackdown during the Biden administration.

Meltem Demirors, General Partner at Crucible Capital, stated: "The emergence of cryptocurrencies as an election issue has driven significant attention to Bitcoin and the broader category of crypto assets, which attention is now translating into sentiment, and as we know, sentiment can lead to fund flows."

Trump once branded the digital asset industry a scam, but later shifted to supporting the industry. Digital asset companies have become influential in elections by making substantial donations to political action committees to pursue more favorable regulations.

Drew Miller said on Wednesday that in the past 12 days, the market seems to "very much believe" that Trump will win. He said, "You can see this from banks and cryptos."