Many factors, such as U.S. monetary policy expectations and supply overhangs, might explain the weak correlation between election odds and BTC prices.
A comparison of three-day changes in BTC's price and Republican election odds between June 1 and August 15 shows a lack of definitive correlation between the two variables. While the popular narrative suggests a strong positive link between Bitcoin's (BTC) recent price performance and Republican candidate Donald Trump's election odds, market data paints a different picture.
Since Trump's mid-June meeting with Bitcoin miners, crypto market experts have frequently connected the Republican candidate's performance on betting markets with Bitcoin's price. The narrative gained momentum after Trump survived an assassination attempt in July, and BTC came under pressure early this month amid Democrat candidate Kamala Harris' resurgence in betting markets.
However, an analysis of the three-day change in BTC's price and the three-day change in Polymarket odds of Trump winning the presidential election between June 1 and August 15 shows no definitive trend or clear correlation between the two variables. The chart indicates a scattered pattern in the relationship between shifts in Republican odds and BTC's price changes, with no clear connection.
The analysis period from June 1 to August 15, 2024, reveals that the expected relationship between election odds and BTC prices has been weaker than anticipated. This may be due to various factors influencing prices, such as the path of U.S. monetary policy, concerns around upcoming supply overhangs, and other market dynamics.
Some factors, like aggressive selling by the German state of Saxony and fears of a supply deluge from defunct exchange Mt. Gox's creditors, have reportedly capped the upside in BTC since June, overshadowing shifts in the Republican odds. Nonetheless, as Kamala Harris gains momentum in the crypto space, the upcoming election could still become a significant driver of BTC prices.
As we approach the November election, it will be interesting to see if prediction market data begins to reveal election news as a key factor—or even the dominant force—behind Bitcoin's price movements.