Bitcoin Prices and Trump’s Presidential Odds: An Analysis of Correlation

Analyzing the Relationship Between Bitcoin Prices and Trump’s Presidential Odds

While the prevailing narrative suggests a robust positive correlation between the recent price movements of bitcoin (BTC) and the increasing odds of Republican candidate Donald Trump securing the U.S. presidency, an examination of market data indicates otherwise. Since Trump’s pivotal meeting with bitcoin miners in mid-June, crypto market analysts have frequently linked Trump’s performance in betting markets with fluctuations in bitcoin’s price.

This narrative gained traction following Trump’s survival of an assassination attempt in July, coinciding with a period when BTC faced downward pressure, particularly as Democrat candidate Kamala Harris began to gain momentum in betting markets earlier this month.

However, an analysis conducted by prime broker FalconX, which compared the three-day changes in BTC prices with shifts in Polymarket odds for Trump’s presidential win from June 1 to August 15, reveals a lack of a definitive trend or clear correlation between these two variables. The data is structured as follows:

• X-axis: Represents the three-day percentage increase or decrease in BTC’s price between June 1 and August 15.
• Y-axis: Indicates the increase or decrease in the odds of a Republican victory.

Data points were sampled every 12 hours. The analysis highlighted several patterns:

• Red Dots: Represent the period from June 29 to July 29, during which Trump’s chances of winning the White House surged on Polymarket.
• Blue Dots: Illustrate the period characterized by Democratic momentum.
• Grey Dots: Reflect the remaining timeframe from June 1 to August 15.

The scattered arrangement of the red dots suggests that there is no substantial connection between the fluctuations in Republican odds and variations in BTC’s price. Notably, the blue and grey dots exhibit a similar disorganized pattern, reinforcing the observation.

“Interestingly, throughout the entire analysis period from June 1 to August 15, 2024, there has not been a discernible relationship between election odds and BTC prices,” stated David Lawant, head of research at FalconX, in an email to CoinDesk. “One possible explanation for these unexpectedly weak correlations could be the multitude of crosscurrents influencing prices, such as the trajectory of U.S. monetary policy, concerns about potential supply overhangs, and other factors we have previously highlighted.”

Some of these crosscurrents, including aggressive selling by the German state of Saxony and anxieties regarding a supply surge from creditors of the defunct exchange Mt. Gox, have reportedly limited BTC’s upward potential since June, overshadowing the shifts in Republican odds.

Nevertheless, with Harris now gaining traction in the crypto space, the forthcoming election could emerge as a significant driver of BTC prices. “Of course, a lot can change before November 5. As the election date approaches, it will be intriguing to see whether prediction market data starts to reveal election news as a pivotal driver—or perhaps even the primary influence—behind price movements,” Lawant remarked.