According to data on historical market performance during US elections, the bullish momentum in the cryptocurrency market may slow down following the inauguration of US President-elect Donald Trump on January 20, 2025.
In the United States, stocks and cryptocurrencies such as Bitcoin (BTC) perform well in the weeks following the presidential election, then decline once the next president takes office, according to data from Bloomberg and researcher Macrobond Financial.
According to data from research group TS Lombard, this phenomenon is especially noticeable when the incumbent president is a Republican. Republicans are generally seen as more business-friendly, leading to greater euphoria in the markets following the election.
Scott Chronert, U.S. equity strategist at Citi, said, “(I)vestors should tactically dampen the post-election rally if the S&P 500 exceeds our year-end strength target of 6100, which roughly corresponds to a +5% index move from election day.” I wrote: From November Research Notes.
Data shows that market performance is rebounding after an initial correction following the inauguration.
source: Eric Soda
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post-election rally
As of Dec. 2, the S&P 500 index was at 6,047, up nearly 4.5% from Nov. 5, according to Google Finance.
Cryptocurrencies have benefited greatly since Trump’s election victory, with many saying his victory will help the industry, Cointelegraph Research said.
Bitcoin’s price rise has been particularly pronounced, with the world’s most popular cryptocurrency up more than 30% since the election. Solana (SOL) also showed a similar rise.
Other analysts believe Bitcoin’s rally will continue after the inauguration, but there could be bumps along the way. According to Ryan Lee, senior analyst at Bitget Research, BTC price could correct by up to 30% before resuming its bull run.
“Historical data trends show that Bitcoin could still correct by as much as 30% before reaching its cyclical high,” the analyst told Cointelegraph on November 27.
Such a correction would hypothetically drop Bitcoin to around $70,000 per coin.
Web3 investment firm MV Global told Cointelegraph that investors expect the cryptocurrency bull market to continue into 2025, peaking in the second half of the year.
source: TS Lombard
Weakening correlation?
Bitcoin has historically been viewed as a “high-risk asset closely linked to U.S. stocks,” particularly the Nasdaq, the U.S. technology stock index, but that relationship has weakened in recent months, according to Binance Research.
“Since March 2024, the 30-day correlation between Bitcoin and Nasdaq has fallen to 0.46, one of the lowest levels in five years,” Binance said.
Nonetheless, a nearly 50% correlation with US stocks means BTC is significantly exposed to a broader market downturn.
According to data from MacroAxis.com, the correlation between Ethereum (ETH) and Nasdaq is much higher, at around 0.66.
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