How Will Bitcoin React After the US Election?

With the U.S. presidential election approaching, it’s worth examining how past elections have affected the price of Bitcoin. Historically, the U.S. stock market has exhibited clear trends during elections. Given Bitcoin’s correlation with stocks and, most notably, the S&P 500, these trends can provide insight into what might happen next.

S&P 500 Correlation

Bitcoin and the S&P 500 have historically maintained a strong correlation, especially during bull cycles for BTC and periods of risk-on sentiment across traditional markets. As Bitcoin matures and “decouples” from stocks and its narrative as a speculative asset, this phenomenon may end. However, there is no evidence that this is the case.

Figure 1: Bitcoin’s 180-day correlation with the S&P 500 over the past five years.

Outstanding performance after the election

The S&P 500 typically reacts positively after U.S. presidential elections. This pattern has been consistent over the past few decades, with stocks typically seeing a significant surge in the year following an election. In the S&P 500 vs. Bitcoin year-over-year chart, we can see when the election occurred (orange circles), and the price action of BTC (black line) and the S&P 500 (blue line) in the months that followed.

Figure 2: Bitcoin and the S&P 500 delivered excess returns in the year following the election.

2012 Election: In November 2012, the S&P 500 was up 11% year over year. A year later, that gain had surged to around 32%, reflecting a strong post-election market rebound.

2016 Election: In November 2016, the S&P 500 was up about 7% year over year. A year later, the index was up about 22%, again showing a big post-election gain.

2020 Election: The pattern continued in 2020. In November 2020, the S&P 500 was up about 17-18%; by the following year, it had climbed to nearly 29%.

The latest phenomenon?

This isn’t limited to just the three elections during Bitcoin’s existence. To get a larger data set, we can look at the S&P 500 returns over the past four decades, or ten elections. There has only been one year with negative returns in the twelve months following election day (2000, the dot-com bubble burst).

Figure 3: The S&P 500 Has Performed Well Mostly Since Election Day.

Historical data shows that a win for either the Republican or Democratic party won't have a significant impact on these positive market trends. Instead, the upward momentum is more about resolving uncertainty and boosting investor confidence.

How will Bitcoin react this time?

With the 2024 US presidential election approaching, it’s tempting to speculate on Bitcoin’s potential performance. If historical trends hold, we could see a significant increase in price. For example:

If we experience the same percentage gain as in 2012 within 365 days of the election, the price of Bitcoin could rise to $1,000,000 or more. If we experience the same scenario as the 2016 election, we could climb to around $500,000, while something similar to 2020 could see $250,000 in BTC.

It’s worth noting that each occurrence resulted in returns dropping by about 50% each time, so perhaps $125,000 is a realistic target for November 2025, especially if that price and data align with the middle band of the rainbow price chart. It’s also worth noting that in all of these cycles, Bitcoin actually experienced higher cycle peak gains!

Figure 4: Rainbow price chart consistent with post-election price targets based on historical patterns.

in conclusion

Data suggests that the period following the U.S. presidential election is bullish for both the stock market and Bitcoin. With the next election less than two months away, Bitcoin investors may have reason to be optimistic about the coming months.