If historical data is anything to go by, then Bitcoin (BTC) may struggle to see a significant rally before the upcoming 2024 US presidential election. This position is submitted by Bitfinex analysts who recently looked into patterns observed from past election cycles.
According to the analysts, BTC price tends to experience notable corrections in the months leading up to the event. Thereafter, it then experiences a strong recovery.
Bitcoin Price Movement in Election Season
The experts observed what appears to be a recurring pattern in Bitcoin’s behaviour in the last three election cycles. That is, in 2012, 2016, and 2020.
In each of those years, Bitcoin faced a period of decline around two to three months prior to the election, with a rally occurring post-election. This trend, the analysts explained, may have to do with the broader volatility in financial markets that usually comes with the end-of-year period, a time when increased market fluctuations are not exactly unusual.
“This seasonality affects all markets, including Bitcoin,” the experts said, emphasizing how the election season impacts virtually all financial markets.
According to these analysts, the uncertainty that usually fills the air towards the election event contributes to the tension. That is as traders tend to be more careful, avoiding risks. This ultimately affects Bitcoin and traditional markets alike, they noted.
Furthermore, Bitcoin’s increasing correlation with the S&P 500 (SPX) is another contributor to this pattern, as both assets tend to react similarly to broader economic uncertainties.
Post-Election Gains on the Horizon?
Considering the same historical trend, Bitcoin has seen significant gains after the election. This was noticed in the 2016 and 2020 elections, with Bitcoin’s price surging almost immediately after even as market confidence returned.
Interestingly, the experts have issued advice against assuming a direct cause-and-effect relationship. They noted that while Bitcoin’s price movements often show similar trends at election, other factors also come into play. Factors such as US monetary policy, global economic conditions, and technological advancements in the crypto space may bring about the unexpected.
