In the past seven days, bitcoin has surged by about 13%. Some investors see this surge as a signal that the Republican candidate Donald Trump, who is considered pro-cryptos, will win the US presidential election.
The increase in this digital asset far exceeds the global equity and gold index. Billionaire Stan Druckenmiller pointed out that cryptos are one of the signs predicting Trump's victory in the market.
In a tense campaign against Democratic opponent, Vice President Kamala Harris, Trump promised to make the USA the global capital of cryptos. His support for the industry has led bitcoin to be seen as one of the "Trump trades", part of a series of bets on his return to the White House.
Bitcoin leading other assets in October.
The rise in Bitcoin is accompanied by changes in the prediction market, with these controversial platforms allowing people to bet on election results. On the Polymarket platform, Trump's win probability has surged to 58%, while Harris has dropped to 41%. On PredictIt, Trump's chances of winning are 54%, compared to Harris at 49%.
ETF inflows:
"The heat of the prediction market has brought high levels of implied volatility, driving up the spot bitcoin price," said Arisa Toyosaki, co-founder of Cega, a crypto derivatives service provider. "A large amount of money flowing into bitcoin exchange traded funds (etf) has also driven up the price of bitcoin."
Since October 11, a group of American ETF inflows into bitcoin exchange traded funds (ETFs) has exceeded $1.6 billion. As of Thursday, the price of bitcoin was around $67,260, while its historical high in March was $73,798.
Despite the prediction markets leaning towards Trump, the majority of polls still fall within the margin of error, with less than three weeks until election day. According to the average data of national polls by Real Clear Politics, Harris leads Trump by approximately 1.6 percentage points. In the average data of key states, Trump is leading by less than 1 percentage point.
Harris' Position:
Harris takes a more cautious stance on the issue of cryptos, committing to support the regulatory framework and industry development of digital assets under appropriate safeguards. Her position contrasts with the crackdown by the Biden administration, sparking optimism among crypto traders.
Crucible Capital's General Partner Meltem Demirors stated: "The emergence of cryptos as an election topic has drawn attention to Bitcoin and the broader category of crypto assets, which attention translates into market sentiment, and as we know, sentiment often triggers fund flows."
It is worth noting that Trump once referred to cryptos as a scam, but his support for the industry has since greatly changed. Digital asset companies are seeking friendlier regulatory rules in this election by making large donations to political action committees, becoming significant players in this election.
Druckenmiller stated in a Bloomberg television interview on Wednesday that the market has been "very confident" in Trump winning over the past 12 days. "You can see it in the performance of banks and cryptos," he said.
