Does politics save the market?...Bitcoin, Gold, Stocks, The Real Boom Market is in 'This Configuration'

▲ Bitcoin (BTC), Dollar (USD), US Elections/AI-generated image

An analysis suggests that Bitcoin (BTC), gold, and the stock market showed stronger returns in a political structure where power is distributed rather than completely dominated by a specific political party. This is interpreted as the market preferring a 'divided government' environment where policy uncertainty is limited, rather than political monopoly.

According to Benzinga on May 14 (local time), crypto analyst Benjamin Cowen compared the performance of the S&P 500, Bitcoin, and gold by U.S. political power structure in a podcast released on May 13. Cowen analyzed that historically, markets recorded the strongest returns under a divided government rather than a complete takeover by either the Democratic or Republican party.

It was also diagnosed that Bitcoin's median performance was weak during periods of so-called political 'sweeps,' where a specific party controls both the White House and Congress. Cowen explained that while there were strong exceptional uptrends, like in 2017, overall, Bitcoin's median returns were relatively sluggish during periods of complete control by both Democrats and Republicans.

However, looking only at average returns, the difference was clear. During periods when Republicans held power, Bitcoin rose by an average of 410%, while during Democratic administrations, it recorded an average return of -2%, influenced by a significant decline during the Biden administration. However, Cowen noted that since average values can be influenced by some extreme ups and downs, based on median values, a divided government was a more favorable environment for Bitcoin.

This year's trend is also far from the historical average. According to Cowen's analysis, Bitcoin has fallen by about 7% this year, which contrasts with the historical average return of a 65% increase in midterm election years. This discrepancy suggests the possibility of greater volatility or deeper corrections if the macroeconomic environment deteriorates.

Regarding the stock market, it was evaluated that it has maintained an upward trend in the long term, regardless of changes in political power. Cowen explained that the S&P 500 has continued its upward trend over recent decades despite changes in presidential and congressional power, monetary policy, and economic cycles. He suggested that if Congress returns to a divided structure in 2027, it could be a favorable environment for Bitcoin based on past patterns, but added that Bitcoin's trading history is short, so the sample is limited. Ultimately, the analysis concludes that long-term market structure and liquidity conditions are more important variables than short-term political narratives.

*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*