Bitcoin, the world’s first and most prominent cryptocurrency, has been subject to various market cycles since its inception. Many analysts and enthusiasts believe that Bitcoin follows a four-year cycle, which is closely tied to the Bitcoin halving event—a process where the reward for mining Bitcoin is halved, leading to a significant reduction in the rate of new Bitcoin entering the market. Historically, Bitcoin’s price has surged following each halving, with many pointing to this as the primary driver of Bitcoin’s cyclical price movements.

However, after the most recent 2024 halving, Bitcoin and the crypto market as a whole haven’t seen much movement yet. Could this mean that the Bitcoin four-year cycle is over? Interestingly, this four-year cycle also seems to correlate with U.S. election cycles. Since 2012, Bitcoin has not only responded to its internal halving cycles but also exhibited significant price movements around U.S. election periods. This article explores the historical correlation between Bitcoin’s price movements and U.S. elections, seeking to predict possible trends as we approach the 2024 election.

Historical Overview of Bitcoin Price Movements during previous U.S. Elections

2012 Election

The 2012 U.S. election took place during Bitcoin’s early days when it was still relatively unknown to mainstream investors. After reached an all-time high (ATH) of approximately $32 back in June 2011, Bitcoin had a significant price correction down to just around $2 by the end of that same year. Leading up to the 2012 election, Bitcoin’s price started to rise gradually to around $12 by November of 2012. While the market was still in its infancy, the post-election period saw a continuation of this growth trend. This period eventually led into 2013, a landmark year when Bitcoin first crossed the $1,000 mark in November, representing an astronomical increase from its previous ATH.

2016 Election

By the time of the 2016 U.S. election, Bitcoin had grown significantly in market awareness and adoption. In the months leading up to the November 2016 election, Bitcoin’s price showed significant growth. At the beginning of the year, Bitcoin was trading at around $430, but by the time November arrived, Bitcoin had surged to nearly $740. After Donald Trump was declared the winner, Bitcoin began an explosive rally that continued throughout 2017, culminating in a peak of nearly $20,000 by December of that year—a massive increase from its previous ATH of $1,200, which it had reached in November 2013.

2020 Election

A similar pattern emerged in 2020. Before the election, Bitcoin had been recovering from a prolonged bear market following its 2017 peak. The crash during the COVID panic caused Bitcoin to drop from around $10,000 all the way to $3,800. As the 2020 election approached, Bitcoin’s price once again experienced steady growth, despite the significant drop caused by widespread economic uncertainty exacerbated by the COVID-19 pandemic. Following Joe Biden’s victory, Bitcoin surged throughout 2021, reaching new all-time highs above $60,000—another significant leap from its previous ATH.

Analyzing the Correlation Between Elections and Bitcoin Price

Data Correlation

A detailed review of Bitcoin price data during election years shows a noticeable correlation between U.S. elections and Bitcoin price movements. Although Bitcoin has generally been on an upward trajectory since its inception, the specific timing of its surges during election years suggests that the electoral process itself may be a catalyst for price movements. While correlation does not imply causation, the consistency of these patterns across multiple election cycles is worth noting.

Election Cycle Theory

Economic theories about the election cycle suggest that U.S. elections have a significant impact on market behavior. The “presidential election cycle theory,” for example, posits that stock markets tend to perform differently in different years of the four-year presidential term. While this theory traditionally applies to the stock market, there is reason to believe it could also impact Bitcoin. Given Bitcoin’s growing role as a financial asset, it is increasingly influenced by the same macroeconomic factors that affect traditional markets, including election cycles.

Coincidence

Financial analysts and crypto experts have offered various perspectives on the correlation between Bitcoin and U.S. elections. Some argue that the correlation is coincidental, driven by broader economic factors or the Bitcoin Halving, rather than the elections themselves. Regardless of the exact cause, there is broad agreement that U.S. elections are a critical period for Bitcoin, with the potential for significant price movements.

Factors Influencing Bitcoin During Election Periods

One of the key reasons Bitcoin’s price often doesn’t see dramatic movements before election results is due to uncertainty regarding potential regulatory and policy changes on cryptocurrencies. Investors are typically hesitant to make significant moves when there is uncertainty about whether the incoming administration will impose stricter regulations on cryptocurrencies or if they might take a more favorable stance.

After the election, as the policies and regulatory approach of the new government become clearer, investors gain a better understanding of whether the administration will be a threat to the cryptocurrency market or not. If investors perceive that the new government is not hostile towards crypto, their confidence in the market increases. Coupled with the halving event, this renewed confidence often leads to a significant surge in Bitcoin’s price as investors feel more secure in committing to the asset, driving demand and pushing prices higher.

Predicting Bitcoin’s Movement in the 2024 Election

Applying the patterns observed in 2012, 2016, and 2020 to the upcoming 2024 election suggests that Bitcoin could again see a period of steady growth leading up to the election, followed by a significant post-election surge.

Donald Trump’s favorable stance towards Bitcoin, if he wins the 2024 election, could play a crucial role in reinforcing investor confidence, potentially leading to a surge in Bitcoin’s price similar to the post-election rallies observed in previous cycles.

Potential Scenarios

• Bullish Case: If historical trends repeat, we could see Bitcoin reaching new ATHs in the months following the 2024 election. A favorable regulatory environment under the new administration, combined with continued institutional adoption, could drive significant price increases.
• Bearish Case: On the other hand, if the election results in stricter regulatory measures or if macroeconomic conditions deteriorate significantly, Bitcoin’s price could face downward pressure.

Event-Driven Price Movements

Key dates to watch during the 2024 election cycle include the party conventions, debates, and of course, election day. Each of these events could trigger volatility in Bitcoin’s price, particularly if there are unexpected developments. Additionally, unforeseen “black swan” events, such as a global economic crisis, could also have a significant impact on Bitcoin’s price during this period.

Conclusion

The correlation between Bitcoin and U.S. elections, observed in the 2012, 2016, and 2020 election cycles, offers valuable insights into potential price movements as we approach the 2024 election. While past performance is not indicative of future results, the consistency of these patterns suggests that investors should be prepared for significant price action in the months leading up to and following the 2024 election. By closely monitoring the political landscape, and maintaining a robust risk management strategy, investors can better navigate the potential volatility and capitalize on opportunities in the Bitcoin market during this period.