Policy · · 5 min read

The U.S. Election is Just Days Away: Which Party is Best for Bitcoin Mining Stocks?

Ever wondered how U.S. presidential elections impact the stock market? We explore historical trends, stock market predictions, and Bitcoin price movements under different administrations.

The U.S. Election is Just Days Away: Which Party is Best for Bitcoin Mining Stocks?

With the U.S. election only days away, are you wondering which party might be better for Bitcoin mining stocks? In fact, there is a few popular research pieces about the broader stock market and U.S. elections. 

S&P 500’s “Predictive” Power in U.S. Elections

The S&P 500 has had an uncanny ability to “predict” presidential election outcomes. According to LPL Financial, this index has accurately forecasted the winner in 20 out of the last 24 elections. Here’s how this pattern has worked: when the S&P 500 posted a positive return in the three months leading up to election day, the incumbent party won the White House 12 out of 15 times. Conversely, when the index showed negative returns during that period, the incumbent party lost 8 of the last 9 times.

This year, with the S&P 500 showing positive performance, historical patterns would suggest a win for the incumbent party if the trend continues. However, caution is advised: the political landscape we are living in is more unpredictable than ever. The 2020 election, for example, broke this pattern when Donald Trump lost to Joe Biden despite the S&P 500 gaining 2.3% in the months before the election.

S&P 500 Index Returns in U.S. Presidential Election Years

Based on Morgan Stanley’s report, the S&P 500 historically has delivered gains in most election years, with 83% of the 23 election years since its inception showing positive returns.

Notable insights include:

This data reveals that regardless of which party wins, election years tend to foster positive S&P 500 performance. However, much like the cautionary note on predictive power, this historical return trend is not guaranteed. The market’s reaction depends heavily on specific economic conditions, policy changes, and external factors in any given year.

BTC Price Changes in U.S. Presidential Election Years

Inspired by the S&P 500’s historical election year returns, I examined Bitcoin’s price changes across past election cycles. The reason for examining Bitcoin’s price is that Bitcoin mining stocks are highly correlated with it. While both are volatile, mining stocks tend to experience more amplified price swings than Bitcoin. 

Key BTC election year trends include:

While Bitcoin has shown substantial gains in these years, attributing this solely to election outcomes or party control oversimplifies the picture. Bitcoin’s growth is driven by global adoption, technological advancements, and decentralized market dynamics, which makes it less dependent on specific political administrations compared to traditional stocks.

Bitcoin’s decentralized nature limits the predictive power of U.S. election cycles. With no direct ties to any nation’s political system, Bitcoin grows according to global demand, technology, and macroeconomic factors. As a result, while election years can bring volatility to Bitcoin’s price and by extension, Bitcoin mining stocks, the cryptos’ growth trend is minimally impacted by political changes in the long run.

A Long-Term View: Zoom Out and Let Markets Do Their Thing

Let’s be real: predicting the market based on election outcomes can be as reliable as predicting the weather a year in advance. Historically, the U.S. stock market tends to rise during most presidential terms, regardless of party. Darrow Wealth Management finds that political gridlock—when different parties control the presidency, Senate, and House—is typically the best for markets. Why? Because it limits big policy shifts, allowing businesses to carry on without the huge uncertainty.

In fact, stock returns generally go up over time- unless a financial crisis or other major shock intervenes. So, while election years add extra excitement, the best approach is to stay focused on the big picture.

Bitcoin and its mining stocks add a unique layer to this. Unlike traditional stocks, Bitcoin isn’t directly tied to the U.S. political structure, and its decentralized nature allows it to grow regardless of the political climate. This resilience highlights the importance of taking a birds eye view. Bitcoin’s price will undoubtedly fluctuate, and Bitcoin mining stocks will follow, but the long-term trend has been positive.

Final Thoughts

Election-year speculation can be fun and political figures come and go. But markets are here to stay—and they have a long-term track record of resilience. Whether it’s Bitcoin or the stock market, they will follow their own path regardless of who sits in the Oval Office.

Outside of the investment space, go out and vote if you can. Each vote shapes not only the present but also the future—the culture and values that you, your children, and grandchildren will inherit.

Bonus

This July, I had the opportunity to listen to former President Donald Trump speak in Nashville—the first U.S. president ever to appear at a Bitcoin conference! His presentation covered a range of policy directions he’d consider if back in office. In particular, his talk on energy and AI could have a real impact on the Bitcoin mining industry.

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Clip from Donald Trump's Bitcoin 2024 Keynote Speech


Disclaimer: The views expressed in this article are my own and are based on publicly available information. This content is intended for informational purposes only and should not be construed as investment advice. Readers are encouraged to conduct their own research before making any investment decisions. Past performance is not indicative of future results. No recommendation or advice is being provided as to the suitability of any investment for any particular investor.

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