While the US election has been too close to call, sentiment among Bitcoin investors has been bullish as the cryptocurrency briefly passed the $14,000 mark.
While the price has slipped back to below $14,000, looking at volatility over the past 12 hours, it appears Bitcoin is reacting to news coming out of the US elections as states declare who they’re giving their votes to.
At the time of writing, it’s neck and neck with Biden marginally in the lead with several states still left to declare. But Trump is still in with a chance.
Pollsters get it wrong again
The US election has been a lot closer than mainstream pollsters have predicted. While the likes of the Economist and other mainstream polls said Trump had no chance, crypto markets like Polymarket and Augur had Trump within touching distance of a win.
Crypto pundits have weighed in on why that is, most notably Vitalik Buterin. He provided a series of reasons why prediction markets seemed to have a better handle on Trump’s chances, without committing to one over another.
There's a big difference between statistical models and prediction markets this US election; and it's a puzzle why this is happening.
Naturally, this set tongues wagging. Paul Graham, the co-founder of Y-Combinator put it down to "clueless and/or partisan bettors" rather than a way for “secrets to escape”.
We talked about this earlier, and I believe @NateSilver538 said that it was because the market odds are set by clueless and/or partisan bettors. I.e. it's the opposite of Poindexter's reason for favoring prediction markets: that they allow secrets to escape.
Others have said that because of the size of prediction markets being fairly small, they are more susceptible to market manipulation, meaning people are changing the odds to help create a better pay day.
When people analyze prediction markets, they forget they are only SLIGHTLY less prone to manipulation than statistical models. I hope we will get liquid enough markets by the next election that this will be less of an issue, but as of today, it is not. For better data, look here: pic.twitter.com/dOJW5kvH0t
Either way, crypto markets have ticked up over the last 24 hours, recovering some of the $15 billion that was lost on Tuesday. None of the top 20 crypto projects by market cap has moved more than 2% in 24 hours, but as discussed earlier, election driven volatility might not be reflected in the 24-hour timeline.
Wall Street looks to Senate for clarity
Over on Wall Street, stock markets were closed, but Futures Markets were heading south late into trading on Tuesday. The S&P Futures is down 1.19%, the Dow 1.65% but the tech-centric Nasdaq surged 3.9% late last night triggering a circuit breaker.
Contracts on the Nasdaq 100 jumped 3.5% within an hour, setting off a trading pause for two minutes to allow investigators to understand what was causing the volatility.
As European markets opened, stocks slid as Trump prematurely claimed he had won the US election despite millions of votes remaining uncounted in a tight race. At the time of writing, America is still days away from being able to count all the votes, as states are trying to wade through more than 100 million postal votes that were submitted ahead of polling day.
As noted yesterday, markets are looking to Senate seats to see how power will be divided after all the votes are counted.
Thus far, the Republicans appear to have retained the Senate with only one seat swinging to the Democrats. If Trump gets in, he’ll have carte blanche to pass whatever policy he wants. If Biden gets in, Democrat promises of big-spending will be almost definitely blocked at the Senate level.
The one thing we do know for sure is there's still all to play for.
