The cryptocurrency market’s bullish momentum may slow after United States President-elect Donald Trump’s inauguration on Jan. 20, 2025, according to data on historical market performance during US election years.
In the US, stocks — and cryptocurrencies such as Bitcoin (BTC) — perform well in the weeks after a presidential election and then cool off once the President-elect takes office, according to data from Bloomberg and researcher Macrobond Financial.
This is especially pronounced when the incumbent president is a Republican, according to data from TS Lombard, a research group. The Republican party is typically seen as more business-friendly, sparking greater post-election market euphoria.
“[I]nvestors should tactically fade a postelection rally should the S&P 500 exceed our 6100 year-end bull case target, which roughly aligns with a +5% index move from election day,” Scott Chronert, Citi’s US equity strategist, reportedly wrote in a November research note.
The data shows market performance rebounding after an initial post-inauguration correction.
Source: Eric Soda
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Post-election rally
As of Dec. 2, the S&P 500 index stands at 6,047, a nearly 4.5% gain since Nov. 5, according to Google Finance.
Cryptocurrencies saw big gains after Trump’s election victory, as many say his win will benefit the industry, Cointelegraph Research said.
Bitcoin’s price bump has been especially pronounced, with a more than 30% post-election gain for the world’s most popular cryptocurrency. Solana (SOL) clocked similar gains.
Other analysts believe Bitcoin’s rally will continue post-inauguration, though there will be bumps along the way. According to Ryan Lee, the chief analyst at Bitget Research, the BTC price could correct as deep as 30% before resuming its bullish run.
“Historical data trends show that Bitcoin may still correct as much as 30% before it reaches its cyclical top,” the analyst told Cointelegraph on Nov. 27.
Such a correction would hypothetically tank Bitcoin to around $70,000 per coin.
Investors expect the cryptocurrency bull run to continue into 2025 and peak in the second half of the year, MV Global, a Web3 investing firm, told Cointelegraph.
Source: TS Lombard
Weakening correlations?
Historically, Bitcoin has been “considered a high-risk asset closely linked to US equities” —particularly Nasdaq, an index of US technology stocks — but that relationship has weakened in recent months, according to Binance Research.
“Since March 2024, the correlation between Bitcoin and the Nasdaq on a 30-day rolling basis dropped to 0.46, one of the lowest levels in five years,” Binance said.
Still, a nearly 50% correlation with US stocks means substantial exposure for BTC to any broader market downturn.
Ether’s (ETH) correlation with the Nasdaq is even higher, at around 0.66, according to data from MacroAxis.com.
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