Trump or Harris? What will happen in the market before and after the U.S. election?

Source: Talking About Li and Outside

The crypto market has never lacked hot topics; almost every so often, a new significant event becomes the focus of everyone's attention and discussion. For example, the key event in September was the focus on whether the Federal Reserve would announce an interest rate cut, followed by a new round of wealth creation stories around various MemeCoins. Now, it seems everyone is concerned about whether Trump or Harris will be elected president. Perhaps once the dust settles on the U.S. election, the market will shift its focus to other directions and choose new points of interest.

Currently, the U.S. election is about to determine the winner. According to some foreign media predictions, the new occupant of the White House may be preliminarily confirmed as early as noon or afternoon on November 6 (Beijing time). Today (November 5), due to some uncertainty among traders and investors regarding the election results, short sellers seem to have taken advantage of mainstream media news to stir up the market, causing Bitcoin to drop to around $66,800. However, a small rebound soon followed, and as of the writing of this article, Bitcoin's price is $68,000. As shown in the figure below.

In the next couple of days, developments and news related to the U.S. election are likely to continue to be highlighted across major media and social platforms. Given the significant differences in views on Bitcoin between Trump and Harris, this will continue to affect the short-term direction of the crypto market. Overall, it seems these uncertainties are creating continuous fluctuations in the short-term market.

So, what might happen next? Let's first compare the historical price changes of Bitcoin:

If we simply review history, it seems that Bitcoin tends to experience some pullbacks before U.S. presidential elections. For example, I saw a comparison chart shared by a partner in the group:

In 2016, Bitcoin fell by 10% before the U.S. election.

In 2020, Bitcoin declined by 6% before the U.S. election.

And this time, Bitcoin has already dropped by 6%. As shown in the figure below.

In terms of trends, the majority of market opinions previously expected Trump to win, as many analysts view Trump as a "crypto-friendly" president. If we continue to compare data from the Polymarket platform, we can also find some interesting things, such as:

Starting from October 6, Trump's winning odds began to rise, and Bitcoin almost simultaneously started to increase.

On October 30, Trump's winning odds peaked, and Bitcoin's price also reached its peak around the same time.

In addition, a previous article from Talking About Li and Outside shared another interesting historical comparison data, let's take a look:

Bitcoin's first halving (November 2012), U.S. election (November 2012), 5 months later: In April 2013, BTC reached ATH (all-time high).

Bitcoin's second halving (July 2016), U.S. election (November 2016), 13 months later: In December 2017, BTC reached ATH.

Bitcoin's third halving (May 2020), U.S. election (November 2020), 12 months later: In November 2021, BTC reached ATH.

Bitcoin's fourth halving (April 2024), U.S. election (November 2024), then?

From this perspective, the U.S. election cycle seems to align quite well with Bitcoin's growth cycle. Of course, historical data cannot be completely relied upon, and the above data should be viewed as a set of interesting reference points.

But what if the final result is a victory for Harris? Will the market directly declare the start of a new bear market cycle? How should we respond?

Some analysts believe that if Harris wins, it would definitely be bearish for the crypto market, especially for some altcoins viewed as securities, which are likely to continue facing strict but unclear regulation from the SEC, potentially leading to a new round of larger declines.

However, some analysts hold a more optimistic view, believing that whether Trump or Harris wins, Bitcoin will continue to rise in the medium to long term, and it might even reach $100,000 before the end of this year.

We tend to lean towards the latter view, as we also believe that regardless of who ultimately becomes president, the crypto market cannot directly enter a bear market. We still believe that a new round of a decent bull market will emerge in the next six months to a year.

This viewpoint has actually been expressed in some of our previous articles in Talking About Li and Outside, because in our view, while the U.S. presidential election is quite important for the market—after all, a new official may bring different policies—the factors that can directly influence the medium to long-term trends of the crypto market remain the Federal Reserve's interest rate cuts, changes in global liquidity (increase in M2 money supply), and the large-scale adoption of ETFs globally… and other significant trends and factors. In other words, we believe that these broader macro trends are unlikely to undergo significant changes.

So, if you are very concerned about the potential short-term fluctuations in the market, you might consider taking some hedging actions. If you are making medium to long-term investment plans, then now is not the time for any rash actions; just wait for the Bitcoin trend to improve.

We will continue to maintain our previous advice: manage your positions according to your risk tolerance, and still allocate a significant portion to Bitcoin in batches. For smaller positions, you can approach high-risk MemeCoins with a mindset of accepting a total loss as per your needs. Moreover, it seems that the trend of MemeCoins is currently at a phase peak, and perhaps soon we will see some narratives rapidly rotate again. As for altcoins, according to discussions among partners in the group, it is advisable to focus on leading projects in popular sectors (or consider sectors that were hot last year but have not yet heated up this year). I agree with this approach, as the relative risk might be slightly lower.

In summary, as mentioned at the beginning of this article, the crypto market has never lacked hot news or events. Just like now, no one seems to care about Bitcoin's halving event, no one cares about governments selling Bitcoin, and no one cares about whether the Federal Reserve will start cutting interest rates… Perhaps in a few months, who the president of the United States is will also be of no concern.

Market hot news or events will always appear before retail investors at the most opportune moments; we should not let various news disrupt our plans and strategies. What we should care about is: do you currently hold Bitcoin, and has your Bitcoin increased or decreased?