The market doesn’t like uncertainty, and U.S. election season is the height of uncertainty. Historically, BTC prices has rallied for roughly 1 year after each election.
Elections in the US create a lot of uncertainty and turmoil in not just the stock markets but also indices with respect to policies, regulations and allocation of fiscal spending. Much like any other event, the upcoming elections result in the fluctuations of the stock market because the participants in the market expect certain policy developments affecting certain industries such as technology, energy or finance.
During such heightened volatility conditions, investors start looking for assets that will protect them from swings in the markets. In such cases the assets that investors consider good strong stores of value have always been gold, dollar and yen.
For the last couple of years, these assets have been cryptocurrencies like Bitcoin. Many have turned to looking for those with better technology and inflation-resistant features.
U.S. elections tend to provide Bitcoin with an inflow as people treat it as storage. When political tensions rise during the November elections, clients prefer to transfer their funds into Bitcoin believing it to be a safe asset.
Furthermore, since Bitcoin is not a currency that is directly issued and controlled by any state’s officials, investors who are worried about legislative changes or shifts in monetary policies immediately after the elections find it attractive.
Displacement of funds in this way can increase the demand for Bitcoin, thereby causing major price spikes during and following election periods.