Bitcoin missed out on a cross-asset rally sparked by dovish Fed comments. The increasingly competitive U.S. election has raised doubts about whether Donald Trump has a chance to implement his pro-cryptocurrency agenda.
On Wednesday, Bitcoin fell 2.4%, one of its biggest declines since 2024, lagging a surge in seven major tech indexes driven by Fed expectations. On Thursday, Bitcoin fell further and was trading at $64,299 at press time.
Bitcoin has become a proxy for Trump's chances of returning to the White House after the Republican candidate pledged to make the United States "the crypto capital of the earth and a Bitcoin superpower." However, Democratic candidate Kamala Harris has also won a lot of support among young people, black and Hispanic voters, and Harris currently has a higher chance of winning than Trump in markets predicting political outcomes. The Harris campaign has not yet detailed its position on the digital asset sector.
Noelle Acheson, author of the "Crypto Is Macro Now" newsletter, labeled Harris' "rising wealth" as a "political factor" that "could suppress" digital asset prices. Arca trading director Kyle Doane said some of Bitcoin’s recent weakness could stem from Harris’ “slight uptick in the polls.”
Bitcoin's volatility points to a broader rethinking of previous Trump trades, which came into focus last month when the former president seemed more likely to win the November U.S. election.
In addition to politics, crypto markets have been hit recently by other risks, such as the possibility that the U.S. government could dispose of seized bitcoins and that some creditors of the collapsed Mt. Gox exchange could sell seized tokens.
Federal Reserve Chairman Jerome Powell hinted on Wednesday that the Fed would cut interest rates in September unless inflation progress stalled. The prospect of loose monetary policy has driven gains in U.S. stocks and bonds.
Bitcoin has risen more than 45% this year, thanks to inflows into U.S. exchange-traded funds (ETFs). The rally has cooled after hitting an all-time high of $73,798 in March, two months after the ETF was launched.
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