- ‘Buy this sector if X person wins’ isn’t a very easy prediction to make, says one strategist of the US election.
- Traders have piled into bets on crypto to benefit from a Trump win.
- Markets are more complex, say analysts.
Would a potential second term for Donald Trump really benefit crypto holdings?
Not necessarily.
“‘Buy this sector if X person wins’ isn’t a very easy prediction to make,” Michael Antonelli, a market strategist at wealth management firm Baird posted on X. “It’s often the opposite, and the world moves so fast.”
$37 million
The comments come as some in the crypto industry are throwing support behind Donald Trump as he seeks a second term in the White House.
That’s because he’s seen as the more pro-crypto candidate after Joe Biden’s administration cracked down on the sector.
Polymarket, a site that allows bettors to trade their predictions of world events, shows punters have piled almost $37 million into bets that Trump will win in November.
The so called Trump trade has also emerged in other markets as traders seek bets that will pay off if their predictions play out.
Tough to predict
Markets can often be more complicated, though.
To illustrate his point, Antonelli said that contrary to expectations, the alternative energy sector had outperformed the traditional energy sector during former President Trump’s first administration.
It’s surprising, because Trump tended to eschew environmental concerns.
It’s not the only example.
MAGA, an exchange-traded fund launched by Point Bridge gives traders a way to bet on companies thought to perform better under Republicans or Republican policies.
Yet the ETF “did way better under Biden than it did under Trump,” Bloomberg analyst Eric Balchunas posted.
Defence companies also outperformed under Barack Obama’s administration, according to Balchunas. That’s even though Republicans are typically seen as the more pro-military political party.
‘Good luck’
“Good luck to anyone using POTUS for trading signals,” Balchunas said.
Trump has recently embraced the crypto industry — promising to free Silk Road creator Ross Ulbricht, meeting with Bitcoin mining executives, and planning to speak at the biggest crypto event of the year in Nashville, Tennessee.
For that reason, some market participants expect crypto prices to soar if Trump does indeed win the presidency a second time.
“A Trump term is likely to move markets, but he pivots in unpredictable directions,” Omar Sayed, former portfolio manager at hedge fund Millennium Management, wrote in his newsletter.
“It is hazardous to make bets in the near term.”
Tom Carreras is a markets correspondent for DL News. Got a tip about Trump and crypto markets? Reach out at tcarreras@dlnews.com
