U.S. presidential election market volatility drives Bitcoin prices to reach a historic high

Tuesday night, as the U.S. presidential election entered its final, intense phase, the market saw significant volatility, with stock futures broadly rising. Investors speculated that former President Trump might gain an advantage in the election, with the Dow Jones Industrial Average futures up by 605 points (about 1.4%) and S&P 500 and Nasdaq 100 futures rising by 1.3% each. Additionally, Bitcoin reached a historic high of $75,000, and the dollar strengthened, in line with market expectations that Trump’s victory could benefit the dollar.

Participants in the cryptocurrency space were also closely monitoring the election. Coinbase became one of the major corporate donors, contributing over $75 million to support the pro-cryptocurrency political action committee Fairshake, reflecting the cryptocurrency industry’s hopes of electing legislators favorable to its development.

Bitcoin prices Breaks $74,000 Mark

Bitcoin surged significantly on U.S. election night, hitting a historic high as Trump gained momentum in the race. Investors were betting that his potential win would benefit the cryptocurrency market. As Trump led in electoral votes, Bitcoin prices reached $74,392, a 7% increase. Historical data shows that Bitcoin’s prices return significantly rose in the 90 days following the last three presidential elections, partly due to the halving events typically associated with election years, as well as shifts in Federal Reserve policy.

Potential Market Impact of Election Results

Goldman Sachs forecasts that if Trump wins and the Republicans control Congress, the S&P 500 could rise by 3%. If Trump wins but Congress is divided, the index may rise by 1.5%. In contrast, if Harris wins and Congress is divided, the S&P 500 could fall by 1.5%. On the policy front, Trump’s tax cut plans may benefit businesses, but the risks of high tariffs and trade wars could increase market uncertainty and trigger rising inflation. Under Harris's leadership, sectors like banking and healthcare may face stricter regulations, while the clean energy sector could benefit.

Limited Overall Impact of Presidential Role on the Stock Market

Experts note that the president’s election has a limited overall impact on the stock market; the real market driver is the direction of policies. While the S&P 500 is generally unaffected by the president, certain sectors tend to react more sensitively to policy changes. For instance, the renewable energy and healthcare sectors are often influenced by policy shifts.

Market Focus on Election Results

As election results unfold, investors are closely watching market reactions and the final composition of Congress. Nomura suggests that a market pullback could occur post-election, as investors and hedge funds hold significant long positions. UBS believes that any market pullback triggered by election volatility could provide an opportunity to increase holdings. In the long term, the U.S. stock market is expected to benefit from moderate growth, low interest rates, and structural support driven by artificial intelligence.

Summary

Ryan Detrick, Chief Market Strategist at Carson Group, emphasized that regardless of the election outcome, the U.S. economy is in good shape, which will be the fundamental driver for the stock market. While the president may influence short-term market trends, the ultimate market driver remains economic fundamentals. As the election remains tight, global markets will continue to focus on the results and their potential impact on future policies and the economy. In this volatile market, investors should approach with caution to capture potential investment opportunities.

When considering shares, indices, forex (foreign exchange) and commodities for trading and price predictions, remember that trading CFDs involves a significant degree of risk and could result in capital loss.

Past performance is not indicative of any future results. This information is provided for informative purposes only and should not be construed to be investment advice.