With the US presidential election approaching, it’s worth examining how past elections have affected Bitcoin’s price. Historically, the US stock market has shown notable trends around election periods. Given Bitcoin’s correlation to stocks and, in particular, the S&P 500, these trends can provide insight into what might happen next.
S&P 500 Correlation
Bitcoin and the S&P 500 have historically had a strong correlationespecially during BTC bull cycles and periods of risk-on sentiment in traditional markets. This phenomenon could potentially end as Bitcoin matures and ‘decouples’ from stocks and its narrative as a speculative asset. However, there is no evidence yet that this is the case.
Better performance after the elections
The S&P 500 has typically reacted positively following U.S. presidential elections. 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 elections take place (orange circles) and the price development of BTC (black line) and the S&P 500 (blue line) in the following months.
Election 2012: In November 2012, the S&P 500 saw year-over-year growth of 11%. A year later, growth jumped to around 32%, reflecting a strong market rally following the election.
2016 Election: In November 2016, the S&P 500 rose about 7% year-over-year. A year later, the index was up about 22%, again showing a substantial post-election boost.
Election 2020: The pattern continued in 2020. The S&P 500 grew by about 17-18% in November 2020; the following year it had risen to nearly 29%.
A recent phenomenon?
This isn’t limited to the previous three elections when Bitcoin existed. To get a larger data set, we can look at the previous four decades, or ten elections, of S&P 500 returns. Only one year had negative returns twelve months after election day (2000, when the dotcom bubble burst).
Historical data suggests that whether Republican or Democrat, the winning party does not have a significant impact on these positive market trends. Instead, the upward momentum is more about resolving uncertainty and increasing investor confidence.
How will Bitcoin react this time?
As the 2024 US presidential election approaches, it’s tempting to speculate on Bitcoin’s potential performance. If historical trends continue, we could see significant price increases. For example:
If we experience the same percentage gains in the 365 days following the election as we did in 2012, the price of Bitcoin could rise to $1,000,000 or more. If we experience the same as the 2016 election, we could rise to around $500,000, and something similar to 2020 could see BTC hit $250,000.
It’s interesting to note that each event has resulted in returns dropping by around 50% each time, so perhaps $125,000 is a realistic target for November 2025, especially since that price and data aligns with the middle bands of the Rainbow Price ChartIt’s also worth noting that Bitcoin has experienced even higher peak cycle gains throughout all of those cycles!
Conclusion
The data suggests that the period following a 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 months ahead.
For more in-depth information on this topic, you can watch a recent YouTube video here: Will US Election Be Good For Bitcoin?