How will Bitcoin react after the US election

As the US presidential election approaches, it is worth examining how past elections have influenced the price of Bitcoin. Historically, the US stock market has shown notable trends during election periods. Given Bitcoin’s correlation with stocks and especially the S&P 500, these trends could provide insights into what could happen next.

S&P 500 Correlation

Bitcoin and the S&P 500 have historically maintained a strong correlation, particularly during BTC bull cycles and periods of risk-on sentiment in traditional markets. This phenomenon may end as Bitcoin matures and “decouples” from equities and narrative as a speculative asset. However, there is still no evidence that this is the case.

Figure 1: Bitcoin and S&P 500 180-day correlation over the past five years. View the live chart 🔍

Post-election outperformance

The S&P 500 typically reacted positively following the US presidential election. This pattern has been consistent over the past few decades, with the stock market often posting significant gains in the year following an election. In the S&P500 vs Bitcoin YoY Change chart we can see when there are elections (orange circles) and the price action of BTC (black line) and S&P 500 (blue line) in the months ahead.

Figure 2: Bitcoin and S&P 500 Huge Gains in Post-Election Year. View live chart 🔍

2012 Election: In November 2012, the S&P 500 was up 11% year-over-year. A year later, this growth had increased to around 32%, reflecting a strong post-election market growth.

2016 Election: In November 2016, the S&P 500 was up about 7% year-to-date. A year later, it was up about 22%, again showing substantial post-election momentum.

Election 2020: The pattern continued in 2020. The S&P 500 was up about 17-18% in November 2020; the following year, it rose to nearly 29%.

A recent phenomenon?

This is not limited to the last three elections while Bitcoin has existed. To get a larger data set, we can look at the last four decades, or ten elections, of S&P 500 results. Only one year had negative returns twelve months after Election Day (2000, with the bursting of the dot-com bubble ).

Figure 3: The S&P 500 performed well after Election Day most of the time.

Historical data suggests that, whether Republican or Democrat, the winning party does not have a significant impact on these positive market trends. In contrast, upside momentum is more about resolving uncertainty and boosting investor confidence.

How will Bitcoin react this time?

As we approach the 2024 US presidential election, it is tempting to speculate on Bitcoin’s potential performance. If historical trends hold, we could see significant price increases. For example:

If we experience the same percentage gains in the 365 days after the election as in 2012, the price of Bitcoin could rise to $1,000,000 or more. If we live like the 2016 election we could go up to around $500,000 and something similar to 2020 could see a BTC of $250,000.

It’s interesting to note that each occurrence resulted in returns falling by about 50% each time, so perhaps $125,000 is a realistic target for November 2025, especially since that price and dates line up with the middle bands of the chart of Rainbow prices. It’s also worth noting that throughout these cycles, Bitcoin continued to experience even higher cycle peak gains!

Figure 4: Rainbow price chart aligning with post-election target price based on historical pattern. View live chart 🔍

Conclusion

The data suggests that the period after the US presidential election is generally bullish for both the stock market and Bitcoin. With less than two months until the next election, Bitcoin investors may have reason to be optimistic about the coming months.

For a more in-depth look at this topic, check out a recent YouTube video here: Will The US Election Be Bullish For Bitcoin?