The price of bitcoin traded near $68,000 late Wednesday as the world's largest cryptocurrency gains momentum heading into election season. Meanwhile, many spot bitcoin ETFs are clearing short-term downtrends following a wave of inflows.
"We believe the recent bitcoin strength is being driven by the return of bitcoin's correlation to Trump's election odds," Bernstein analysts led by Gautam Chhugani wrote in a Tuesday note reported by The Block. "Despite both sides indicating support for digital assets, the crypto market bid is stronger on Trump's odds improving on the election prediction markets."
Former President Donald Trump leads Vice President Kamala Harris on betting prediction platform Polymarket, with odds of 59.7% to 40.2%. Polymarket also has 82% odds of Republicans taking the Senate. The platform has a 55% chance that Democrats take the House of Representatives.
Trump also leads on trading prediction platform PredictIt. Contracts for a Trump election win are trading for 55 cents, while contracts for a Harris win are 50 cents. However, Harris still holds a 45% to 42% lead over Trump in the national polls, according to the Reuters/Ipsos poll from Tuesday.
Bitcoin Price Could Test Highs
The Bernstein analysts in a note last week said they expect bitcoin to hit a new high of $80,000 to $90,000 in the case of a Trump win. They forecast bitcoin could test $40,000 in the near-term with a Harris victory.
Standard Charter also estimates that bitcoin price could hit new highs ahead of the Nov. 5 election. The firm said the steepening in the U.S. Treasury yield curve, renewed interest in spot bitcoin ETFs and rising odds of a Trump victory are all fueling momentum.
"For bitcoin the combined factors mean a bleed up toward the all-time high of $73,800 looks likely preelection," Standard Charter wrote in a Tuesday note reported by The Block.
JPMorgan, in a Friday note, said bitcoin's price is benefiting from the emergence of the "debasement trade." The debasement trade is when investors seek alternative assets, such as gold or bitcoin, to hedge against economic instability. Institutional investors and hedge funds might view gold and bitcoin as gaining from the debasement trend, JPMorgan wrote.
A Trump win would also reinforce the debasement trade through his tariff proposal and expansionary fiscal policy, the analysts added. However, they added that other asset classes outside of gold and bitcoin have priced in a "very low probability" of a Trump win.
JPMorgan wrote that it is now "bullish on digital assets into 2025."
Harris Reveals Policy, Candidates Make Crypto Cases
Trump and vice-presidential running mate JD Vance are both openly pro-bitcoin and are considered by many in the industry to be the crypto-friendly ticket.
Although critical of digital assets in the past, the former President has stated he wants the U.S. to dominate bitcoin production and has lamented federal crypto regulations. Trump also vowed to fire SEC Chair Gary Gensler as well as to create a "strategic national bitcoin stockpile." And in September, Trump launched his own cryptocurrency project, World Liberty Financial.
Elsewhere, Harris on Monday revealed some of her crypto policies in her "Opportunity Agenda for Black Men." The agenda includes economic plans to benefit African American men across the U.S.
The agenda calls for "supporting a regulatory framework for cryptocurrency and other digital assets so Black men who invest in and own these assets are protected." More than 20% of Black Americans own or have owned cryptocurrency assets, according to the Harris agenda. "She will make sure owners of and investors in digital assets benefit from a regulatory framework so that Black men and others who participate in this market are protected," the agenda reads.
Matt Hougan, Chief Investment Officer of asset manager Bitwise, in a blog post Monday said Harris' words were more of a Rorschach test than policy. "If you're anti-crypto, you can see Harris pushing for tough regulation of crypto in the name of 'protecting' investors; if you're pro-crypto, you can see Harris pushing for regulatory clarity and a pathway forward for the industry."
Hougan wrote that the statement shows that "Harris recognizes that crypto matters enough to an important demographic that she'll take the time to call it out."
Despite lacking much detail, Harris' announcement created $5 billion in bitcoin market cap.
Hougan wrote that the "price action tells me that there is a lot of capital on the sidelines waiting for the all-clear to enter the market."
He previously expected a GOP victory or split government to push bitcoin above $80,000. But now, Hougan isn't so sure. "Monday's rally tells me people don't want to be left behind if and when crypto takes off. There is a lot of dry powder on the sidelines. As soon as we get any whiff of clarity, I think we go higher fast," Hougan wrote.
Spot Bitcoin ETF Flows
And some of that capital is already pouring in to the crypto space. Spot bitcoin exchange-traded funds recorded $1.18 billion in inflows during the three trading days from Oct. 11 to Oct. 15, Farside Investors data shows. The spot bitcoin ETFs saw $555.9 million in inflows on Oct. 14 amid Harris' announcement, the largest inflow since early June. The Fidelity Wise Origin Bitcoin Fund generated $391.4 million in inflows over the period to lead the group.
BlackRock's iShares Bitcoin Trust is still the overall leader, with more than $22 billion in inflows since the Jan. 11 launch. Fidelity ranks second with $10.26 billion in total inflows.
In total, the spot bitcoin ETFs recorded $19.8 billion in inflows since launch, which have been offset by $20 billion in outflows from the Grayscale Bitcoin Trust.
Bitcoin Price And Crypto Stocks
Bitcoin traded around $67,850 late Wednesday, easing slightly from its morning high above $68,300. The price of bitcoin jumped about 9% over the last week. Bitcoin has rallied nearly 15% over the past month, TradingView data shows.
The world's largest cryptocurrency spiked 60% year-to-date. Still, bitcoin is trading below its record high of $73,798 from March 14.
Meanwhile, many of the spot bitcoin ETFs are setting up as bitcoin gains steam. Most spot bitcoin ETFs move in tandem, with their prices tied to the price of bitcoin.
IBIT cleared short-term trend levels around the 38 range this week, offering investors early entry opportunities. Shares are basing with a 41.99 buy point.
FBTC rebounded above a short-term line around its 57 range this week. The Fidelity ETF has a 64.42 buy point for its consolidation.
Shares of crypto exchange Coinbase surged 7.2% Wednesday to rebound above their 200-day line. Coinbase stock reclaimed its 50-day line on Friday.
Bitcoin miners also rallied Wednesday and have broadly trended higher since Friday.
CleanSpark jumped 5.4% Wednesday, while Iren popped 7.1%. Marathon Digital swung 6.9% higher.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
