Bitcoin price fell as the presidential debate began
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The price of bitcoin began falling during the U.S. presidential debate Tuesday night, losing almost 4% by the time it hit a low Wednesday morning.
Why it matters: Bitcoin has been seen as a proxy bet on the election, with traders assuming a win for Former President Donald Trump would boost the price of the oldest cryptocurrency.
Zoom in: The price started falling almost as soon as the debate began.
- It has generally been trading in a narrow band around $60,000 since the end of June, well below the all-time high it struck in March, at $73,737.
Zoom out: The proxy theory is straight forward.
- "If Trump's victory odds materially increase, we can expect Bitcoin to react given his embrace of the industry," Alex Thorn, head of research at Galaxy Digital, an investment management company focused on cryptocurrency, said in an August note.
Yes, but: FalconX, a crypto prime brokerage, researched shifts in Trumps odds of winning the election and did not find a strong correlation with bitcoin price over the summer.
- With that said, a lot of other factors have been in play this year that could also be tugging on the price, such as the macro economy, major supply overhangs from BTC seized by governments and the distributions from the failed exchange, Mt. Gox.
The bottom line: Tuesday night that correlation looked more clear. As price fell, so too did Trump's odds of winning on the most popular blockchain-based prediction market, Polymarket.
- As of this writing, roughly 14 hours later, bitcoin price has returned to its level just before the debate began. Trump's odds clawed back too, though not quite all the way.
