(Bloomberg) -- Bitcoin’s push toward a record high is fizzling as pro-crypto Republican nominee Donald Trump’s election odds drop in betting markets.
The biggest digital asset traded around $70,000 after sliding 4% — the most in a month — a day earlier. The retreat comes alongside a narrowing of Trump’s lead over Democratic candidate Vice President Kamala Harris on PredictIt, Polymarket and Kalshi, where people can bet on election results.
Bitcoin has been dubbed a Trump trade because of the former president’s tight embrace of the crypto industry, which spent big on promoting its agenda during campaigning. He was further ahead in prediction markets earlier in the week, a period when Bitcoin came within $234 of March’s all-time peak of $73,798.
Trump’s “stalling momentum and potential derisking ahead of the election” might be behind Bitcoin’s retest of the $70,000 level, Sean Farrell, head of digital-asset strategy at Fundstrat Global Advisors LLC, wrote in a note.
Crypto Capital
Trump envisages the US as the crypto capital of the planet, whereas Harris in a measured approach has pledged to back a regulatory framework for the sector. Both stances contrast with an industry crackdown under President Joe Biden.
A slump in stocks accompanied the latest Bitcoin wobble amid caution ahead of the vote as well as next week’s Federal Reserve meeting, when officials are expected to cut interest rates again and provide clues about the policy outlook.
Prediction markets are controversial because of disputes about their informational value and potential vulnerability to manipulation. Opinion polls suggest a very tight race as Election Day looms on Nov. 5.
“While Bitcoin would likely fall if Harris wins the election, its response to a Trump presidency is harder to gauge,” Ed Yardeni of Yardeni Research Inc. wrote in note. “Bitcoin could continue to rally, or given its year-to-date gains, the currency could fall in a classic case of buy-the-rumor-sell-the-news.”
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