Election Year Bitcoin Boom? Unpacking BTC’s Post-Election Patterns for 2024

The highly anticipated 2024 election is just two weeks away, and Crypto Twitter is abuzz with chart-based analyses of how U.S. elections might affect BTC prices. In a notable shift from previous elections, cryptocurrency regulation has emerged as a distinct policy point in each presidential candidates' economic platforms. To varying degrees, both candidates have signaled a dovish and friendly shift in their stance on cryptocurrency regulation. Given this backdrop, the 2024 election promises to be a notable turning point in crypto's journey toward mainstream adoption and institutional acceptance. With this in mind, this week we dive into the statistics to get to the bottom of Bitcoin’s election year seasonality.

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Data Wrangling

To begin, we obtain daily BTC historical price data from BitFinex via investing.com including prices from February 2, 2012 onwards. This data is then rearranged to show daily returns on each of the 250 days following Election Day. As a reminder, U.S. Election’s are statutorily set to be held on the Tuesday following the first Monday of the month of November. We calculate (i) average and median daily returns, as well as (ii) average and median cumulative returns from day T+1 to T+250, beginning from Election day.

The 30,000 Foot View

Below we plot the median cumulative returns on election years vs non-election years. 

Cumulative returns following the first Tuesday of November

We choose to plot the median cumulative daily returns rather than the average to avoid bias introduced by small sample size (only three in the period covered) and the skew introduced by remarkable rally following the 2020 Election. The results are stunning. The first five months following the Presidential Elections show a median return of 300%!

Zooming In

A closer look at the statistics leads to some interesting, and perhaps unexpected, results. The table below shows the average and median cumulative returns in the first 30, 60, and 125 days from the first Tuesday of November.

Average and median cumulative returns from first Tuesday of November

While BTC performs well in the first 30 days post-election, this pattern is not unique to election years. Indeed, even in non-election years, Bitcoin posts similarly robust returns during this period (22.6% vs. 21.7% in election years). Some refer to this effect as the "Santa Claus Rally." 

The outperformance in election years does not materialize until we look at longer time frames. At T+60 days, BTC averages +58.6% vs just +28.5% in non-election years; and at T+125 days, BTC averages +228.4% vs +17% in non-election years!

Conclusion

It bears noting that the sample size here is quite small, and these results should be taken with a grain of salt. Nevertheless, the data is striking. Given the salience of crypto regulation in this year's election, the political backdrop suggests that this election year may not be different from the previous three. Indeed one may argue that it may be more pronounced. If a similar pattern plays out in 2024, expect an average Santa-Claus rally of ~+20% in first 30 days, followed by a bullish Q1/Q2 in the following year. 

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