The 'Trump Trade' Narrative in Crypto is Exaggerated

The price of bitcoin has been rising, as have Trump's chances of winning the US presidential election, according to prediction markets like PredictIt and Polymarket. Bitcoin recently surpassed $73,000 and nearly reached its previous all-time high on the same day that Trump's odds of winning the election on Polymarket reached 69%, the highest level since the failed assassination attempt on the former president's life in June. Many analysts see bitcoin's recent strength as a sign that investors are preparing for a potential Trump victory. However, others argue that the 'Trump Trade' narrative is overstated. To investigate, we analyzed data from prediction markets and found that while there is some correlation between Trump's odds and certain assets, the relationship is modest and likely exaggerated. The correlation between Trump's odds and bitcoin is almost non-existent. This suggests that the 'Trump Trade' narrative may be overblown. Additionally, the impact of the election on markets may be short-term, and the long-term outlook for crypto remains positive regardless of the outcome. The author believes that the focus on the election as a catalyst for markets is misplaced and that the adoption of Web3 and deficit spending will continue to drive demand for crypto. The question of who would be better for crypto, Harris or Trump, is also discussed, with the author concluding that the impact of the president on the industry is overstated. The author expresses skepticism about Trump's commitment to positive progress in the crypto space and notes that his economic plan may have unintended consequences for the industry.