History Suggests Crypto’s Bullish Momentum Should Continue Into the U.S. Election and Afterwards

• Over the past decade, the average return for bitcoin in the second half of October was twice that of the first half.

• Options markets show a bullish bias for the November and December expirations.

• The impact of the U.S. election would have the greatest effect on dogecoin and Cardano’s ADA.

With less than three weeks until the U.S. presidential election, traders are positioning themselves for what’s to come after Nov. 5 and how a new administration will respond to factors affecting financial markets, including crypto.

Crypto has been in an uptrend over the past week, with Chinese stimulus, Western central bank rate cuts, and perhaps the U.S. elections coming into clearer focus among the reasons cited for recent gains.

While cryptos have only really been popular assets for one presidential election in the past (2020), the second half of October typically marks the beginning of a bullish period for financial assets like stocks, so crypto’s move of late is perhaps not that unusual.

Indeed, a look at bitcoin (BTC) shows the second half of October (16-31) produces double the returns of the first half of the month (1-15), according to Coinglass data from 2013 to 2023.

Election effects

Data from ETC Group, part of Bitwise Asset Management, showcased the uncertainty of token prices depending on election results.

Using an implied performance against a theoretical value, ETC Group found bitcoin could move up to 10% in either direction based on the election. Given the current spot price just shy of $68,000, a 10% upside move would mean a new record high, surpassing March’s $73,697. The team also found that the impact of the election would likely have the greatest effect on Cardano (ADA) and Dogecoin (DOGE), with a 18% and 20% moves, respectively.

In addition, data from Ycharts looking at presidential election years since 1950 shows the stock market tends to bottom out in September and/or October and then rally into November. So far, we’re seeing just that with the S&P 500 and Nasdaq, each of which have been on the rise since early last month.

Looking beyond the U.S. election, the options market shows a bullish bias towards bitcoin with the majority of call open interest at the $70,000 and $80,000 strike prices. These strike prices are worth $141 million and $120 million in notional value, respectively, for the Nov. 29 expiry.

The Dec. 27 expiry has an even more bullish bias, with the majority of call open interest at the $100,000 strike price worth over $620 million in notional value, according to Deribit data.

“As we approach the US election with Trump as the most likely outcome and even Harris looking okay from a digital asset perspective, the broader digital asset ecosystem is indeed becoming more likely to become mainstream,” Geoffrey Kendrick, global head of digital asset research at British multinational bank Standard Chartered, wrote in a note on Tuesday.

“For BTC this means a bleed up towards the all-time high of $73,000 looks likely pre-election.”

As the senior analyst at CoinDesk, James specializes in Bitcoin and the macro environment. Previously, his role as a research analyst at Swiss hedge fund Saidler & Co. introduced him to on-chain analytics. He monitors ETFs, spot and futures volumes, and flows to understand Bitcoin.

Follow @btcjvs on Twitter

Helene is a New York-based reporter covering Wall Street, the rise of the spot bitcoin ETFs and crypto exchanges. She is also the co-host of CoinDesk’s Markets Daily show. Helene is a graduate of New York University’s business and economic reporting program and has appeared on CBS News, YahooFinance and Nasdaq TradeTalks. She holds BTC and ETH.

Follow @HeleneBraunn on Twitter