- The cryptocurrency market’s bullish momentum may slow after US President-elect Donald Trump’s inauguration on Jan. 20, 2025, according to historical market performance data.
- Markets tend to outperform after presidential elections and then stall once the President-elect takes office, with the effect being more pronounced when the incumbent president is a Republican.
- While Bitcoin’s price has seen a significant post-election gain of over 30%, some analysts expect a correction of up to 30% before Bitcoin reaches its cyclical top.
The cryptocurrency market has seen substantial gains since the US presidential election in early November. However, historical data shows that performance often stalls once the president-elect takes office.
Post-Election Market Euphoria
Markets, including stocks and cryptocurrencies like Bitcoin, tend to rally after a US presidential election. This effect is especially pronounced when the incumbent president is Republican, as investors welcome more business-friendly policies.
According to Citi strategist Scott Chronert, investors should “tactically fade a postelection rally” once markets overextend. The S&P 500 has gained nearly 45% since election day, while Bitcoin is up over 30%.
Cooling Off After Inauguration
Research shows that market gains made between the election and inauguration day often reverse course once the president takes office. While prices rebound after an initial post-inauguration dip, the breakneck growth seen in the interim typically cools.
Bitcoin’s Correlation to Stocks
Bitcoin has historically traded as a high-risk asset closely correlated to US equities, especially tech stocks. However, crypto’s relationship to the Nasdaq has weakened recently to one of its lowest levels in five years.
Still, with a nearly 50% rolling 30-day correlation, broader stock market downturns could substantially impact Bitcoin and Ethereum. This leaves major cryptocurrencies exposed to post-inauguration declines.
The Road Ahead
Despite potential turbulence around the inauguration, crypto investors remain bullish on Bitcoin’s prospects for 2023. Some expect the current bull run to continue into the second half of next year before peaking.
