Crypto Slumps Alongside Trump's Victory Odds on Polymarket as Uncertainty and Profit-Taking Rise
2024-11-01

Growing uncertainty around the result of next week's U.S. presidential election could be pushing crypto lower just days after bitcoin {{BTC}} came within a few dollars of hitting a new record high. Bitcoin has slumped 1.9% in the last 24 hours and is currently trading at $70,600. Meanwhile, the CoinDesk 20 — an index of the 20 largest cryptocurrencies by market capitalization except for stablecoins and exchange coins — is down 3.9% over the same time frame, led by ether {{ETH}} bleeding 5.3%.
Markets move for all sorts of reasons, but some market watchers are attributing the crypto slump to shrinking odds for a victory for crypto-friendly GOP candidate Donald Trump. On crypto betting site Polymarket, Trump's chances of winning tumbled to just 61% on Thursday from 67% 48 hours earlier. The victory odds for Democrat Kamala Harris have surged to 39% from 33%.
Meanwhile, the stock for Trump Media and Technology Group (DJT) — seen by some as a proxy for Trump's chances next week — has plunged 34% in the last three days after gaining 352% over the previous month.
Broader traditional markets are having a tough go of it as well on Thursday, with the Nasdaq off 2.4% and the S&P 500 1.6%.
“Big slip-ups by both parties over the past few days (Puerto Rico, garbage) have reminded people that the election is too close to call and may be event-dependent," said Matt Hougan, CIO at Bitwise. "This has re-introduced uncertainty,”
Not everyone is convinced, however. Quinn Thompson, founder of crypto hedge fund Lekker Capital, told CoinDesk that the U.S. election is only one facet of the current trading environment. Traders, he suggested, have also been looking at tech earnings, ongoing tensions between Iran and Israel and a sharp rise in U.K. gilt yields following the rollout of the government budget earlier this week.
Thompson reminded that traders could simply be profit-taking after strong momentum pushed bitcoin up 22% in 20 days, and Trump's Polymarket odds from 47% to 67% in a little over a month.
“Kamala's Polymarket odds fell to nearly 1:2, which — considering many think it's a toss up — some mean reversion makes complete sense,” Thompson said. “The reality is everyone is at a standstill until the election, and extremely cautious, so these moves in the final days leading up will have a lot of noise.”
Similarly, Brian Rudick, director of research at crypto trading firm GSR, told CoinDesk that while Trump’s Polymarket odds were weighing bitcoin down, the top cryptocurrency was behaving “very well” considering the decline in equity prices.
“Trump's election winner odds and the price of Bitcoin have had just a 25-35% correlation since Trump began to embrace the digital asset in May,” Rudick noted, though he said that correlation could potentially increase as election day nears.