Bitcoin’s rally to a record high faltered as expectations of a victory for cryptocurrency-backing Republican candidate Donald Trump faded.
The digital currency fell below $69,000 in Asia on Friday after falling 4% in the United States in its biggest loss in a month, as Trump’s lead over Democratic Vice President Kamala Harris narrowed on election betting sites PredictIt, Polymarket and Kalshi.
Trump has been a vocal supporter of the cryptocurrency industry, which has spent heavily on his campaign. The former president was leading by a larger margin in prediction markets earlier this week, with bitcoin within $234 of its all-time high of $73,000.
Bitcoin’s slide below $73,000 may be due to “a fading momentum and a possible risk-off bias ahead of the election,” according to a research note by Sean Farrell, head of digital asset strategy at Fundstrat Global Advisors.
Trump has aspired to make the United States the world’s crypto capital, while Harris has pledged — in a measured approach — to support a regulatory framework for the sector, two very different stances from the stringent regulatory measures the industry faces under President Joe Biden.
Stocks also tumbled along with Bitcoin’s latest slide amid caution ahead of the election and next week’s Federal Reserve meeting, where officials are expected to cut interest rates again and offer hints about the outlook for monetary policy.
Prediction markets are controversial because of differences in opinion over their informational value and the potential for manipulation. Polls suggest a tight race heading into Election Day on Nov. 5.
“Bitcoin is likely to fall if Harris wins, but it’s hard to gauge how it will react to a Trump win…Bitcoin could continue to rally, or it could pull back given its gains since the start of the year, a classic example of buying on expectations and selling on the event,” Ed Yardini of Yardini Research wrote in a research note.
