With Bitcoin rising an average of 54% in the year after the last three U.S. midterm elections, attention is turning to whether the same pattern will repeat as the Nov. 3 election approaches.
According to data reviewed by CoinDesk, Bitcoin’s average return in the 12-month periods following the 2014, 2018, and 2022 midterm elections was 53.7%. The calculation compared the daily closing price on Election Day with the close on the same date one year later.
The 1,579% gain following the 2010 election was excluded from the average. Because the Bitcoin market was very small at the time, this extraordinary return is difficult to compare meaningfully with later periods.
What’s Behind the Post-Election Rally?
Although past performance looks strong, the comparison covers only three election periods. What’s more, the timing of the rallies coincides with Bitcoin’s own cycle as well as with U.S. politics.
The halving, which takes place about once every four years, cuts in half the amount of new Bitcoin miners receive per block. The analysis notes that the bear markets following post-halving rallies coincided with the 2014, 2018, and 2022 midterm election years. The recovery after the elections may therefore reflect the start of a new market cycle more than political outcomes.
During the period examined in CoinDesk’s analysis, Bitcoin had recovered more than 35% after falling below $60,000 in June. If the past pattern repeats, the period after the election could set the stage for a new rally; however, three examples are not enough to say that this will happen this year.
Wall Street Also Sees a Post-Election Difference
The history of stock markets offers a longer comparison. According to Hartford Funds data cited in the article, the S&P 500 has risen an average of 15.17% in the 12 months after midterm elections since 1950. The average return in other years was 7.30%.
The possibility that control of Congress could change in this year’s elections is also on the market’s radar. The results could affect budget negotiations and congressional oversight of crypto activity during the remaining two years of the Trump administration.
Alongside the election calendar, capital flows are also being watched for signs of the strength of Bitcoin’s recovery; CryptoQuant’s latest analysis focused on continued growth in the cost basis and the price holding on to its gains.
Not investment advice.