Bitcoin records a massive rise before US elections : What’s behind it ?

Bitcoin has shown spectacular performance in recent weeks, on the eve of the 2024 American presidential elections. Indeed, the price of Bitcoin, which crossed the $71,000 mark this Tuesday, October 29, 2024, seems to benefit from a particular economic context and increased attention from investors. But is this renewed interest in Bitcoin simply cyclical or does it reveal a deeper trend, particularly related to the imminent American election? According to VanEck, a major player in the investment field, the current signals suggest a “very bullish” setup for Bitcoin, a situation that strangely recalls the 2020 election.

A favorable economic context for Bitcoin

VanEck, one of the largest asset management companies in the world, has drawn investors’ attention to a market setup deemed “extremely favorable” to Bitcoin as the American elections approach. Matthew Sigel, head of digital asset research at VanEck, stated during an interview with CNBC on October 28: “Our bet is that it is a very bullish setup for Bitcoin as the election approaches.” Sigel compares the current situation to that of the 2020 election, when Bitcoin remained relatively calm before embarking on a strong ascent after the announcement of the winner. This parallel, according to him, could indicate a similar pattern in 2024, with increased volatility once the election results are known.

Indeed, the recent performance of Bitcoin, which has seen its price rise from $57,000 to $71,000 within a few weeks, seems strongly correlated with the evolution of Donald Trump’s odds on betting platforms. Platforms like Polymarket and Kalshi evaluate Trump’s chances of winning the election between 62% and 66%. This link between Bitcoin’s performance and the American elections, although complex, reflects the growing influence of political expectations in the crypto market.

A monetary policy that fuels inflation and supports Bitcoin

Aside from the electoral climate, global economic conditions, particularly inflation, play a crucial role in the valuation of Bitcoin. Many influential voices, such as that of hedge fund manager Paul Tudor Jones, see Bitcoin as a hedge against inflation. In a recent appearance on CNBC, Jones stated that he prefers a “basket of gold, Bitcoin, commodities, and tech stocks.” He completely dismisses fixed-rate bonds. This positioning reflects a widespread fear of a continued rise in prices, which drives investors to seek refuge in assets that are uncorrelated with fiat currencies.

According to VanEck, Bitcoin could play an even more important role in the long term. The company projects that by 2050, Bitcoin could reach a price of $2.9 million per unit, particularly due to increased demand from central banks, which may use crypto as a reserve asset. This scenario, although distant, demonstrates VanEck’s bold vision for the future of Bitcoin as an indispensable asset in the global economy. Such adoption would make Bitcoin much more than just a speculative tool but a pillar of international monetary systems.

As the American elections approach and in the face of an uncertain economic environment, Bitcoin positions itself as a key player in risk management for many investors. Whether through the Trump effect or the fight against inflation, crypto continues to assert itself as a credible alternative to traditional assets. However, it remains to be seen whether this favorable context will translate into long-term gains or if the expected post-election volatility will bring new turbulence to the markets. Regardless, Bitcoin’s bullish trajectory leaves no one indifferent.