US Election: Bitcoin Plunges Again, How Far Will It Go?

The world is watching nervously the impact of the American elections on Bitcoin. Last week, Bitcoin flirted with the peaks, brushing against a historical record before experiencing a brutal drop on Thursday. On the eve of a tight election between Kamala Harris and Donald Trump, investors are trying to decode what this volatility means for the future of the emblematic cryptocurrency. This unexpected link between American political turbulence and the price of Bitcoin is becoming a hot topic.

Bitcoin facing the tremors of traditional markets

On Thursday, the price of Bitcoin dropped by 2.8%, falling below the $70,000 mark after nearly approaching its record of $73,737.

This drop, although marked, seems partly related to a common trend in the markets: tech stocks also plunged, with the Nasdaq and the S&P 500 experiencing their worst day of the month.

Large companies, such as Microsoft and Meta, have announced increased spending to meet demand for AI, which has triggered massive stock sell-offs and, by extension, instability for Bitcoin.

Why this correlation? In 2023, Bitcoin is moving in symbiosis with tech stocks, shared between its nature as a safe-haven asset and its popularity among a tech-savvy audience.

This link reinforces the current phenomenon: when investors pull out of large tech stocks, Bitcoin feels the effects. Thus, this dependence on the dynamics of the traditional market questions the true autonomy of Bitcoin as a safe haven.

The impact of the American election on crypto: an unexpected factor of volatility

The race for the White House adds an additional layer of volatility. With Donald Trump, a pro-crypto candidate, facing Kamala Harris, perceived as more restrictive towards cryptocurrencies, the outcome of the election could directly influence the price of Bitcoin.

Trump’s statements favoring Bitcoin production on American soil and his promise to reduce regulation make him a favored candidate among crypto investors.

On the other hand, Harris advocates for a stricter regulatory approach, thus reinforcing the idea that the election outcome could create a significant shift for the crypto market.

Analysts at JP Morgan add that a Trump victory could offer a bullish momentum to Bitcoin. But this prediction is based on projections and assumptions: the true reaction of the markets will depend on multiple economic and geopolitical factors.

Nevertheless, one thing remains certain: crypto investors are closely monitoring the American election, aware that the price of Bitcoin could fluctuate significantly according to the results.

In short, the volatility of Bitcoin during election periods reminds investors that, although Bitcoin often stands as a counterbalance to traditional markets, it remains influenced by global economic and political contexts. This instability could very well persist until the election results, or even beyond, testing the resilience of investors and perhaps revealing new facets of the relationship between Bitcoin and American politics.