Analysis: Why US Election Outcome Won’t Impact Bitcoin’s Q4 Rally

The United States is getting closer to its presidential election date, and many investors are watching the outcome of the election and, most importantly, the impact it will have on Bitcoin.

Some make outlandish claims of BTC crossing the $100,000 mark while some give it a humble $75K barrier cross, depending on the market swings.

While, for a fact, bitcoin volatility is always affected by market trends, inherent fundamentals and wider economic factors, many experts in the crypto space believe that whatever the outcome of the presidential election, the Bitcoin will be unaffected. 

According to Chief Investment of Crypto Hedge Fund ‘ZX Squared Capital’, CK Zheng, while the nation’s growing debt and deficit issue have not been sufficiently handled by any party, it might benefit Bitcoin after the election.

Zhengs added that Bitcoin’s halving in April has traditionally resulted in profitable fourth quarters, and a crucial issue that could benefit Bitcoin has not been addressed by any US presidential contender.

Historical Trends and Market Cycles

In comparison, major US stock indices have not expanded as quickly as Bitcoin, which has grown over 23,000,000% since 2011. During the same period, other major US stock indices saw growth of 282%, whereas the Nasdaq 100 Index saw growth of 541%. The average annual return for Bitcoin was 230%, ten times higher than that of the Nasdaq 100 Index, the next top performer.

Bitcoin has benefitted from past US elections. Just like it happened In 2020 despite the election risks, when Greyscale analysis showed that Over 50% of American investors are considering making a Bitcoin investment. Over half (55%) of those surveyed in 2020 said they were interested in Bitcoin investment products. Comparing this to the 36% of investors who expressed interest in 2019 shows a notable increase. Zhengs said it won’t be different this time. 

Furthermore, according to CoinGlass statistics, Bitcoin has typically surged in the fourth quarter, increasing by more than 50% six times since 2013. The years when there are Bitcoin halving events have frequently increased such benefits.

The fourth quarter of 2020 saw a 168% increase in Bitcoin during the halving; it was also the year of the last US presidential election.

Economic Factors at play 

If the US economy can accomplish a “soft landing,” Zheng stated that the Federal Reserve’s “aggressive” 50 basis point interest rate decrease might also be “bullish” for Bitcoin and risk-taking investments.

By adjusting interest rates just enough to keep an economy from overheating and suffering from excessive inflation, but not enough to trigger a downturn, central banks hope to produce soft landings.

Zheng believes there will be a strong correlation between the price of Bitcoin and the NASDAQ if the Federal Reserve is successful. 

It is anticipated that more institutional capital will come in due to the expanding narrative surrounding Bitcoin as “digital gold” and a safeguard against macroeconomic instability.

However, some experts advise against focussing only on price changes, though. The CEO and creator of Web3 PR agency YAP, Samantha Yap, highlights the significance of the media attention and retail interest that frequently accompany Bitcoin rallies.

Final Thought

The performance of the cryptocurrency is also anticipated to be impacted by the impending April 2024 Bitcoin halving event.In the past, price rises have been linked to halving events, which lower the rate at which new bitcoins are created.

Zheng believes that Q4 or shortly thereafter might see Bitcoin hit a new all-time high. But he also points out that the price of Bitcoin might be closely tied to the NASDAQ index if the Federal Reserve pulls off a gentle landing.

According to the most recent data, the price of Bitcoin is currently hovering around $65,000 – up over 136% since the past year. Many industry observers are still upbeat about Bitcoin’s prospects in the upcoming months despite this brief volatility.