Bitcoin rallies in sign of market bets on a Trump victory

Singapore – A Bitcoin rally is grabbing the spotlight, in part because some investors view the climb as a sign that markets anticipate a victory for pro-crypto Republican candidate Donald Trump in the US presidential election.

The digital asset was up about 13 per cent in the past seven days, well ahead of a global stock gauge and gold.

Billionaire Stanley Druckenmiller cited crypto as among the indicators that markets are pricing in a win for the former president.

Crypto’s emergence as an election issue “is driving a lot of attention to Bitcoin and the broader crypto asset class, and that attention is being translated into sentiment, and sentiment – as we know – leads to flows”, Crucible Capital general partner Meltem Demirors said on Bloomberg Television.

Trump has vowed to make the US the crypto capital of the world

as he duels for votes in a tight race against Democratic rival Vice-President Kamala Harris. His embrace of the sector led to Bitcoin’s classification as a so-called Trump trade – one of a series of wagers predicated on his return to the White House. 

In a Bloomberg Television interview on Oct 16, Mr Druckenmiller said the market during the past 12 days seemed “very convinced” of a Trump win.

“You can see it in the bank stocks, you can see it in crypto,” he said.

Net inflows into a group of a dozen US Bitcoin exchange-traded funds have topped US$1.6 billion (S$2.1 billion) since Oct 11 inclusive.

The token was little changed at about US$67,260 as at 12.58pm on Oct 17 in Singapore, compared with March’s record of US$73,798.

The Bitcoin advance came alongside shifts in prediction markets, controversial platforms of disputed informational value where people can bet on election outcomes.

Trump’s odds on the Polymarket platform have jumped to 58 per cent, while Ms Harris’ have dropped to 41 per cent.

On PredictIt, Trump’s chances are at 54 per cent, compared with 49 per cent for Ms Harris.

While prediction markets have moved in Trump’s favour, the spread in most polls is well within the margin of error, with less than three weeks to election day.

Ms Harris leads Trump by about 1.6 percentage points in the RealClearPolitics average of national polls.

Trump is ahead by less than 1 percentage point in the equivalent measure for battleground states. 

Ms Harris has adopted a nuanced position on crypto, pledging to support a regulatory framework for digital assets and industry growth under appropriate safeguards.

Her position spurred a bout of optimism among crypto traders as it contrasts with a crackdown under the Biden administration.

Trump’s embrace of the sector is an about-face as he once dubbed it a scam.

Digital asset firms have become influential players in the election through big donations to political action committees in pursuit of friendlier rules. BLOOMBERG