Crypto Slumps Alongside Trump's Victory Odds on Polymarket as Uncertainty and Profit-Taking Rise

The final stretch of the U.S. presidential election is keeping traders on their toes after recent big runs higher for crypto and traditional markets.

Cryptocurrency prices fell on Thursday as the final stretch of the U.S. presidential election kept traders on their toes and growing uncertainty pushed some to attribute the decline to shrinking odds for a victory by crypto-friendly GOP candidate Donald Trump.

Bitcoin was trading down 1.9% in the last 24 hours, at $70,600, while the CoinDesk 20- an index of the 20 largest cryptocurrencies by market capitalization, excluding stablecoins and exchange coins - was down 3.9% over the same time frame. Ether was down 5.3%.

Fresh off record highs last week, bitcoin's price has remained sticky with just days to go before the U.S. presidential election, while some market watchers have pointed out that shrinking odds for a Trump victory on crypto betting site Polymarket could be impacting crypto prices.

Trump's chances of winning fell to just 61% on Thursday from 67% 48 hours earlier, while Democrat Kamala Harris's odds rose to 39% from 33%.

Meanwhile, the stock for Trump Media and Technology Group (DJT) – seen by some as a proxy for Trump's chances next week – plunged 34% in the last three days after gaining 352% over the previous month.

Broader traditional markets also took a hit on Thursday, with the Nasdaq down 2.4% and the S&P 500 down 1.6%.

“Big slip-ups by both parties over the past few days (Puerto Rico, garbage) have reminded people that the election is too close to call and may be event-dependent,” said Matt Hougan, CIO at Bitwise. “This has re-introduced uncertainty.”

Others, however, remained skeptical of the narrative that Trump's shrinking odds were the main driver for crypto's downturn.

“The U.S. election is part of the story, but there's also tech earnings, Iran/Israel tensions and a sharp rise in U.K. gilt yields following the rollout of the government budget,” Quinn Thompson, founder of crypto hedge fund Lekker Capital, told CoinDesk.

“Everyone is also watching bitcoin, which has gained 22% in 20 days, and Trump's Poly Kamala's Polymarket odds fell to nearly 1:2, which - considering many think it's a toss up - some mean reversion makes complete sense,” Thompson said. “The reality is everyone is at a standstill until the election, and extremely cautious, so these moves in the final days leading up will have a lot of noise.”

According to Thompson, traders could simply be taking profits after the recent strong momentum, with bitcoin's price up 22% in 20 days and Trump's Polymarket odds rising from 47% to 67% in a little over a month.

Others agreed that Trump's shrinking odds could be impacting bitcoin, but noted that the top cryptocurrency was holding up "very well" compared to declining equity prices.

“Trump's election winner odds and the price of bitcoin have had just a 25-35% correlation since Trump began to embrace the digital asset in May,” said Brian Rudick, director of research at crypto trading firm GSR, though he added that correlation could increase as election day approaches.

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