With the US presidential election approaching, it is worth examining how the previous election has affected the price of Bitcoin. Historically, the US stock market has shown significant trends during election periods. Given Bitcoin’s correlation with stocks and, in particular, the S&P 500, these trends can provide insight into what could happen next.
S&P 500 Correlation
Bitcoin and the S&P 500 have historically held a strong correlation, especially during BTC bull cycles and periods of bearish sentiment across traditional markets. This may come to an end as Bitcoin grows and is ‘minimized’ in stocks and accounts as a speculative asset. However, there is no evidence yet that this is the case.
Working Outside of Post Elections
The S&P 500 tends to react positively following US presidential elections. This pattern has been consistent for the past few decades, with the stock market often making significant gains in the year following an election. In the S&P500 vs Bitcoin YoY Change chart we can see when the election happens (orange circles), and the price action of BTC (black line) and S&P 500 (blue line) in the following months.
2012 election: In November 2012, the S&P 500 saw an 11% year-over-year gain. A year later, this growth has risen to nearly 32%, reflecting a strong post-election market rally.
2016 election: In November 2016, the S&P 500 was up nearly 7% year over year. A year later, it’s up nearly 22%, and shows a significant increase after the election.
2020 election: The pattern continued in 2020. S&P 500 growth was around 17-18% in November 2020; by the following year, it had risen to nearly 29%.
Recent Action?
This is not limited to the previous three elections when Bitcoin existed. For a larger data set, we can look at the last four decades, or ten elections, of S&P 500 returns. Only one year had a negative return in the twelve months following the election day (2000, as the dot-com bubble burst).
Historical data suggests that regardless of whether it is Republican or Democrat, the winning party does not have a significant impact on these favorable markets. Rather, the upward momentum is about resolving uncertainty and improving investor confidence.
How Will Bitcoin React This Time
As we approach the 2024 US presidential election, it is tempting to speculate on the possible performance of Bitcoin. If historical trends hold, we could see significant price increases. For example:
If we get the same percent gain 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 deal with something like the 2016 election, we can go up to about $500,000, and something like 2020 can see $250,000 BTC.
It is interesting to note that each occurrence caused returns to drop by about 50% each time, so perhaps $125,000 is a realistic target for November 2025, especially since that price and data are in line with the middle bands of the Rainbow Price Chart. It is also important to note that throughout those cycles, Bitcoin has actually continued to experience the highest gain of the cycle!
The conclusion
The data suggests that the period after the US presidential election is generally positive 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 more depth on this topic, check out the latest YouTube video here: Will the US Election Be Bullish For Bitcoin?