Bitcoin Rallies To 7-Month High As Cautious Markets Eye US Election

Bitcoin was close to $73,000 on Wednesday, almost breaking its all time high just a week before the U.S. elections. Many traders foresee a surge in market optimism, regardless of the election’s outcome.

The leading digital currency was trading around $72.470 at 0800GMT, after climbing as high as $73,563.63 in late US trade, just shy of its all-time peak of $73,797.98 in March.

This surge in the price of Bitcoin is seen as a bet on Republican victory, as Donald Trump has emerged as the pro-crypto candidate.

As the world is gearing up for the final showdown between the two candidates in the November election, many are already starting to speculate who will win the election and what the result would mean for Bitcoin.

How Would a Trump Victory Impact Bitcoin?

During his campaign, Donald Trump took on the a crypto-friendly persona. Not only have Trump has welcomed cryptocurrency donations, including Bitcoin, Ether, Dogecoin, and Solana, he has also started his own platform called World Liberty Financial to "Defy the tyranny of the traditional bank."

During his presidential election, Trump has also released digital trading cards less than a week after Trump promoted an "official" cryptocurrency project using his name on Truth Social.

While many might disagree with Trump on many of his policies and opinions on different issues, but what they can agree and support is Trump's recent pro-crypto pivot. At a Bitcoin event, Trump pledged to dismiss SEC Chair Gary Gensler immediately, a move resonating with crypto advocates wary of Gensler’s regulatory approach. Trump also proposed creating a national Bitcoin reserve—a goal that, while still undefined, has captivated the crypto community and fueled speculation.

All these points to a single fact-if Trump were to win the upcoming election, it would spur a strong, immediate rally for Bitcoin. But the long term trajectory of Bitcoin under his presidency still remains unclear.

Chandra Duggirala, co-founder and CEO of Portal To Bitcoin, also concur with this sentiment, saying that if Trump were to establish a U.S. Bitcoin reserve, traditional wealth managers might start viewing Bitcoin as a viable asset, likely accelerating its adoption in mainstream portfolios.

“This confidence could drive increased inflows into Bitcoin-focused funds and related products, boosting demand and potentially the price,” Duggirala said. “Such moves could initiate a global rally, as international investors follow the U.S. lead in incorporating Bitcoin into financial portfolios.”

What Could Bitcoin Look Like Under a Harris Administration?

Contrary to Trump, Kamala Harris has always taken a more cautious approach when it comes to cryptocurrencies, though she has recently spoken out in favor of more robust regulations to protect consumers and stabilize markets.

Given Harris's lukewarm approach to Bitcoin, many analysts predicts an initial dip in Bitcoin’s price if Harris were to win the election, followed by a possible rebound later.

Duggirala explained that a Harris victory would likely signal continuity in current economic policy, emphasizing fiscal spending and progressive taxation. A Harris administration could also signal increased regulatory scrutiny on private capital and crypto markets, which supports the theory of a dip in Bitcoin if Harris prevails.

Duggirala adds that if high inflation persists amid increased regulatory pressure, assets like Bitcoin and gold could attract investors looking to preserve wealth.

"The scarcity-driven value of Bitcoin could position it as a top choice for those aiming to safeguard their wealth in a potentially inflationary landscape." He said.

What if the Election Results Are Contested?

A close race between Trump and Harris could lead to a protracted and disputed outcome, triggering heightened market volatility. Historically, assets like Bitcoin see increased trading during such uncertain periods, providing opportunities for derivatives traders to capitalize on price fluctuations.

“In times of distress, Bitcoin has shown a capacity for sharp, rapid price movements,” Duggirala noted, recalling the March 2020 pandemic crash that saw Bitcoin drop nearly 50% before recovering to all-time highs.

In a drawn-out election result, options trading on Bitcoin could see a major spike. Bitcoin futures and options volumes have historically surged during volatile markets, as seen in the 2020-2021 bull run. For seasoned traders, a contested election could create a prime environment to capitalize on Bitcoin’s volatility, drawing global interest in Bitcoin markets.