The possible “Bitcoin President” Donald Trump is courting the crypto scene so intensively that the price of the cyber currency is now increasingly indicating his election chances. But something could ruin the bet.
When Donald Trump was still president, he had little praise for cryptocurrencies: They were “unregulated” and could “facilitate drug trafficking and other illegal activities” and were actually nothing more than “hot air,” the head of state said in 2019 on X, which was then still called Twitter. But like many others, these sentences are just yesterday’s talk for Trump. Because Trump wants to be president again. And that’s why he is now aggressively positioning himself as the savior of all token fans.
Trump has long since discovered the electoral potential in Silicon Valley by embracing right-wing tech moguls like Elon Musk. To make money, he also sells digital trading cards (NFTs) of himself and accepts donations in cryptocurrencies. Most recently, at a crypto trade fair in Nashville, he positioned himself as the future rainmaker for wallet owners: Trump promised that he would upgrade the USA to become the technologically leading “Bitcoin superpower”, make the cyber currency a strategic reserve and fire the crypto-critical head of the US Securities and Exchange Commission.
The relationship is now so close that crypto prices fluctuate noticeably when Trump’s election chances change. Not only on the stock markets, but also on the Bitcoin exchanges, many investors are betting on Donald Trump’s victory. Because they hope that he will fulfill their wishes after the election and that the prices of their investments will rise as a result.
Seismograph for victory
As with all markets, the Bitcoin price naturally goes up and down. But in recent weeks there have been very noticeable movements that indicate that the ups and downs of the most important cyber currency could increasingly correlate with Trump’s chances of returning to the White House.
This was most evident after the assassination attempt on Trump: Trump had barely escaped death by a hair’s breadth when the Bitcoin price exploded – from under 60,000 dollars to almost 67,000 dollars a week later. Elon Musk and his tech buddies supported Trump with millions in donations. The image of the blood-stained Trump, raising his fist in defiance of death like a martyr, went around the world and electrified the Republicans. The Democrats and their ailing candidate Joe Biden seemed to be at the end.
A week later, the trend reversed: Joe Biden threw in the towel. Vice President Kamala Harris blossomed into the new consensus candidate at lightning speed and electrified the Democrats. And the Bitcoin price fell – from just under 68,000 to 64,000 dollars.
Of course, a watertight correlation cannot be derived from this. Exactly in the week after Trump’s bold Bitcoin statements at the crypto conference in Nashville at the end of July, the Bitcoin price collapsed massively – from just under $67,000 to under $54,000 a week later. A quarter of the total price evaporated in just a few days. The crash was even more brutal for other cyber currencies such as Ether.
Bitcoin is not a sure-fire bet on Trump either
However, the collapse probably had less to do with the reaction of crypto fans to Trump’s program than with the general correction in the financial markets. From Tokyo to Wall Street, investors fled from risky investments to safe havens such as government bonds this week. The global stock markets experienced the biggest crash in years.
So even Trump is powerless against the general weather conditions on the stock markets. And no matter how big the connection between Trump’s election chances and the sudden Bitcoin boom after the assassination attempt may have been, statistically speaking, the Bitcoin price depends most on the development of the stock markets and in particular on the US tech exchange Nasdaq.
It is therefore all the more remarkable that in July the usual lockstep was broken and the stock markets and the Bitcoin price temporarily diverged – a rare statistical occurrence. The next two and a half months until the election will show how fleeting the correlation between Trump’s chances and the Bitcoin price is.
Analysts expect that the relationship could definitely strengthen. And Bitcoin remains a certain barometer of sentiment for Trump’s election chances because the Republican has so far chained himself so tightly to the tokens: “With stocks” there is “no such clear winner and loser in the Trump trade” as with crypto currencies, “Bloomberg” quotes an investment expert as saying.
How Trump’s flirtation with Bitcoin continues depends primarily on how the Democrats position themselves on the regulation and promotion of cyber currencies during the election campaign. In any case, Kamala Harris has not yet announced an explicit crypto program like Trump.