Trump’s inauguration could be a sign of a local high for crypto, studies show
Data on historical market performance during US election years suggests that the cryptocurrency market may experience a significant slowdown after US President-elect Donald Trump is inaugurated on January 20, 2025.
In the U.S., stocks — and cryptocurrencies like Bitcoin (BTC) — tend to perform well in the weeks after a presidential election and then cool off after the president-elect takes office, according to data from Bloomberg and researcher Macrobond Financial.
This is especially true when the current president is a Republican, according to TS Lombard, a research group. The Republican Party is typically seen as more pro-business, leading to more market euphoria after an election.
“[I]Investors should tactfully weather the post-election rally if the S&P 500 breaks above the year-end bull case target of 6100, which corresponds to a +5% index move since Election Day. Note.
The data shows a resurgence in market performance after the first post-graduation correction.
Source: Eric Soda
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Post election rally
As of Dec. 2, the S&P 500 index stands at 6,047, a nearly 4.5% gain since Nov. 5, according to Google Finance.
Cryptocurrencies have made big gains since Trump's election, with many saying his victory will benefit the industry, according to Cointelegraph research.
A post-election gain of more than 30% for the world's most popular cryptocurrency was particularly noticeable in the rise in the price of Bitcoin. Solana (SOL) posted similar gains.
Other analysts believe Bitcoin's rally will continue after the inauguration despite bumps in the road. According to Ryan Lee, Principal Analyst at Bitget Research, BTC price may correct up to 30% before resuming its bull run.
“Historical data trends show that Bitcoin can still correct up to 30% before reaching the cycle level,” the analyst told Cointelegraph on November 27.
Such a correction would save Bitcoin to around $70,000 per coin.
Investors expect the cryptocurrency bull run to continue through 2025 and peak in the second half of the year, MV Global, a Web3 investment firm, told Cointelegraph.
Source: TS Lombard
Fainting relationships?
Historically, bitcoin has been considered a high-risk asset closely tied to U.S. stocks — particularly the Nasdaq, an index of U.S. tech stocks — but that relationship has weakened in recent months, according to Binance Research.
“As of March 2024, the correlation between Bitcoin and Nasdaq has dropped to 0.46 on a 30-day rolling basis, one of the lowest levels in five years,” Binance said.
Still, the nearly 50% correlation to US stocks means significant exposure for BTC to any broader market decline.
According to data from MacroAxis.com, Ether (ETH)'s correlation to the Nasdaq is higher at around 0.66.
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