FalconX: Trump election odds are not a dominant factor in BTC prices

Author: Omkar Godbole, CoinDesk; Compiled by Wuzhu, Golden Finance

• Comparing the three-day changes in BTC prices and Republican election odds from June 1 to August 15, it can be seen that there is a lack of clear correlation between the two variables.

• FalconX says that a lot may change in the coming weeks.

While popular narrative holds that there is a strong positive correlation between Bitcoin’s (BTC) recent price performance and Republican candidate Donald Trump’s odds of winning the U.S. presidential election, market data suggests otherwise.

Since Trump’s meeting with Bitcoin miners in mid-June, crypto market experts have been linking the performance of Republican candidates in the betting market to the price of Bitcoin. That narrative has been reinforced after Trump dodged an assassination attempt in July, and after BTC came under pressure earlier this month due to a resurgence in betting markets for Democratic candidate Kamala Harris.

However, an analysis by prime broker FalconX of the three-day change in BTC prices and the three-day change in Polymarket odds of Trump winning the presidential election between June 1 and August 15 showed a lack of a clear trend or significant correlation between the two variables.

The chart shows the lack of a clear relationship between changes in the Republican odds and changes in the BTC price. (FalconX)

The X-axis shows the three-day percentage increase or decrease in the BTC price between June 1 and August 15. The Y-axis shows the increase or decrease in the probability of a Republican victory. The data is sampled every 12 hours.

The red dots represent spikes in the probability of Trump winning the White House on Polymarket between June 29 and July 29. The blue dots represent the so-called Democratic momentum period. The gray dots represent the rest of the period between June 1 and August 15.

The red dots show a scattered pattern, meaning there is no connection between changes in Republican odds and changes in BTC prices. The blue and gray dots show similar patterns.

“Interestingly, there is no clear relationship between election odds and BTC prices over the entire analysis period of June 1 to August 15, 2024. One reason these relationships are weaker than expected could be the many crosscurrents that are impacting prices, such as the direction of U.S. monetary policy, concerns about an impending supply glut, and other factors we have highlighted previously,” said David Lawant, head of research at FalconX, in an email.

Since June, several headwinds have reportedly limited BTC’s upside, such as aggressive selling in the German state of Saxony and concerns about flooding supply for creditors of defunct exchange Mt. Gox, overshadowing shifts in Republican odds of victory.

Still, with Harris now staking out crypto, the upcoming election could become a major driver of BTC prices.

“Of course, a lot can change before November 5. It will be interesting to see if forecasts change as we get closer to Election Day. Market data shows that election news is a key driver, or even the dominant force, of price action,” Lawant noted.