(Kitco News) – Financial markets responded positively to the start of voting in the U.S. as stocks and cryptos surged higher while gold enjoyed modest gains, with investors now looking past the Presidential election to the future of the economy.
“As the U.S. braces for the election results, with the first polls closing at 6 pm ET today,” stocks have edged higher, noted analysts at Secure Digital Markets. “Trump Media & Technology Group's shares saw gains in anticipation of potential favorable outcomes for its namesake. Historical trends suggest a general uptick in stock indices post-election, although short-term market volatility is a typical feature during such periods.”
At the closing bell, the S&P, Dow, and Nasdaq all finished well into the green, up 1.23%, 1.02%, and 1.43%, respectively.
Gold rallied to a high of $2,750/oz in early trading but pulled back in the afternoon as market watchers focused on the latest updates to the polls. At the time of writing, spot gold trades at $2,743 for a gain of 0.25% on the session.
Data provided by TradingView shows that Bitcoin rallied from a Monday low of $66,800 to crest above $70,500, an increase of more than 5.7% in less than 24 hours.
BTC/USD Chart by TradingView
“Market sentiment appears to be swayed by tightening election polls favoring Donald Trump,” said analysts at Secure Digital Markets. “Additionally, there's chatter about Mt. Gox transferring $2.2 billion in tokens to new addresses, a maneuver often preceding payouts to creditors that can temporarily depress prices.”
“Amidst the electoral uncertainty in the U.S., traders are flocking to short-term hedges, reflected in the options market where puts have commanded a premium over calls on the CME, particularly noticeable in a 0.25 delta risk reversal over the past week,” they added. “In the ETF arena, Bitcoin has seen a significant exodus of $541.1 million in capital on the eve of the U.S. elections, despite continued inflows at Blackrock. Ethereum experienced an uptick in outflows too, with Fidelity leading the withdrawal at $63.2 million.”
Looking beyond the election noise, TradingView analyst TradingShot said that Bitcoin is on track to rally to $170,000 once it can break above its all-time high.
“Exactly 3 months ago (August 05), when the price was on the 1W MA50 (blue trend-line), having hit it for the first time since the week of March 12, 2003, we claimed that this was the last stand for Bitcoin if the market wanted to maintain the Bull Cycle, as based on the previous 3 Cycles, it was the absolute supporting trend-line.”
“The 1W MA50 eventually held not once but twice, and that gave way to a rally that last week tested the 73800 All Time High (ATH),” he noted. “That is incredibly bullish, especially only two days before the U.S. elections, as from the historical patterns we've shown you before, a Parabolic Rally has started after each election.”
“So according to our August comparison chart, if history is repeated, BTC is looking towards at least the 1.618 Fibonacci extension from the ATH, which is roughly a little over 170k,” he concluded.
At the time of writing, Bitcoin trades at $69,535, an increase of 3.88% on the 24-hour chart.
Crypto analysts favor a Trump victory
While market watchers are anxious to put the election in the rear-view and get back to focusing on asset prices, for now, the debate around which candidate will be better for cryptos continues, with Trump remaining the optimal choice in the eyes of many crypto investors.
“With Harris elected, the cryptocurrency market may not see much change from a government and regulatory perspective,” said Brian Dixon, CEO of OTC Capital. “She has been in office for almost 4 years and the current administration has been hostile to the digital asset space. There would need to be a significant change in stance on Harris’ part to create fundamental benefit to the markets.”
“Institutional adoption under Harris could follow a more conventional path, with an emphasis on compliance and integration with existing financial infrastructure,” he added. “The current market data suggests that institutional investors are particularly sensitive to regulatory clarity, and a Harris administration would need to change their historical stance to provide the predictability they seek.”
“I believe major financial institutions will accelerate their crypto strategies, particularly if regulatory frameworks become more defined,” Dixon said. “We may also see the emergence of more regulated crypto products, including potential ETFs and banking services, as institutions gain confidence in a more predictable regulatory environment.”
If Trump emerges as the winner, Dixon believes “this will catalyze more dramatic market movements, with Bitcoin's trajectory potentially seeing significant shifts. Current market tension suggests investors are pricing in the possibility of major policy changes under Trump.”
“Based on historical CoinMarketCap data around pivotal political events, we will see amplified volatility as the market processes potential dramatic regulatory changes, including the possible replacement of key regulatory figures,” he noted. “This could lead to rapid price appreciation as speculation increases about crypto's role in a potentially restructured global financial system, with Bitcoin particularly sensitive to these political implications.”
“Institutional adoption under Trump might take a more unconventional path, potentially seeing faster but more disruptive growth,” Dixon said. “The palpable market tension we're currently observing will accelerate as traditional financial institutions reevaluate their cryptocurrency exposure.”
He suggested that traditional financial institutions could “accelerate their crypto strategies not just for growth opportunities, but as a hedge against potential systemic changes” with a Trump victory.
“Historical data suggests that political uncertainty often drives institutional hedging behavior, which could manifest in more aggressive cryptocurrency positions,” Dixon highlighted. “We could see more corporate treasury adoptions and alternative investment structures driven by a broader reassessment of traditional financial systems and global monetary policy.”
That said, he noted that “One important factor regarding Bitcoin specifically is that regardless of who gets elected, both parties will continue to print money and spend it, which I believe will drive Bitcoin’s adoption and performance in the years to come.”
Jesper Johansen, Founder and CEO of Northstake, highlighted several key areas the next administration should focus on.
“Vice President Harris made no promises to revitalize the crypto industry in the United States, which for the last few years has been damaged by unclear and unsustainable regulatory crackdowns,” he said in a note to Kitco Crypto. “Despite their lack of pre-election commitment, urgent change is needed.”
Johansen is part of the crowd that thinks Trump would be better for the digital asset industry, declaring that “Trump has the power to save crypto in the U.S., where urgent change is needed.”
“First amongst the new administration’s priorities should be to define staking as an opportunity for U.S. investors,” Johansen said. “The question still lingers: is staking a commodity or a security? Asset managers need to know how to safely incorporate staking into their ETH ETFs to satisfy the total returns of Ether.”
He noted that “Currently, $6 billion USD sitting in ETH ETFs is not being staked, marking significant missed opportunities. This is also the key reason that uptake of ETH ETFs has lagged behind that of BTC ETFs. ETH ETFs are not as competitive and are being stifled.”
“Once these core issues have been solved, changes are needed within the SEC to ensure that crypto is viewed as a vehicle of innovation rather than something to be feared,” Johansen concluded.
Altcoins rally higher
Altcoins largely followed Bitcoin’s lead higher, with all but a dozen tokens in the top 200 recording gains on Tuesday
Daily cryptocurrency market performance. Source: Coin360
Saga (SAGA) was the top performer, gaining 15.9%, followed by increases of 15.3% and 15.1% for Goatseus Maximus (GOAT) and EtherumPOW (ETHW), respectively. APENFT (NFT) was the biggest loser, falling 3.2%, while Maker (MKR) lost 2.2%, and Toncoin (TON) declined by 1.8%.
The overall cryptocurrency market cap now stands at $2.31 trillion, and Bitcoin’s dominance rate is 59.5%.
