Bitcoin surges to a historic high, with even greater shocks yet to come!

Bitcoin has surged to record levels for the first time since March this year, with global traders closely watching the outcome of the U.S. presidential election, where digital asset supporter Trump is facing off against Harris, who served as vice president during the U.S. government's crackdown on the industry.

On Wednesday during the Asian session, Bitcoin rose over 8%, breaking through $75,000, with an intraday increase of more than $5,000, surpassing the record set in March during the excitement following the launch of the U.S. spot Bitcoin ETF.

As exit polls showed Trump taking an early lead, Bitcoin's intraday gains expanded, but the election results are far from settled. With voting concluded in more than two-thirds of the states, Trump has gained an early lead in the key swing states of Georgia and North Carolina, while the counting in other states is still in the early stages.

Fredrick Collins, CEO and founder of the crypto data platform VeloData, said, “This is definitely because the early data favors Trump. In my view, Bitcoin is one of the top trading tools for the election. Its liquidity is relatively high, and it is closely related to the outcome. Therefore, it can be confidently stated that any rise in Bitcoin's price is related to the increased prospects of Trump winning.”

Other tokens also saw a rebound, with the second-largest cryptocurrency Ethereum surging 6.5% intraday. The so-called memecoin (also known as Dogecoin, Doge), promoted by Trump supporter Elon Musk, soared 18%.

Cosmo Jiang, a general partner at the cryptocurrency-focused investment firm Pantera, said, “Due to its relationship with Musk, Dogecoin has become a special beneficiary.”

Cryptocurrencies have taken the political stage, leveraging the massive campaign funds provided by the industry to advance the election agenda. Bitcoin is viewed by some as the so-called "Trump trade," as Republican presidential nominee Trump supports digital assets during his campaign.

Trump has vowed that if he returns to the White House, he will make the U.S. the global cryptocurrency capital, establish a Bitcoin strategic reserve, and appoint regulators who love digital assets, thus becoming the most pro-industry candidate. The former president has gained more support among cryptocurrency enthusiasts by launching his own projects.

Harris, on the other hand, has taken a more cautious approach, promising to support the establishment of a regulatory framework for the industry.

Expected Volatility

Previous polls showed the election results to be evenly matched, and traders are preparing for potential significant market volatility.

The 30-day implied Bitcoin volatility index has reached its highest level since the political turmoil in July (including Biden's withdrawal from the race), which angered investors. This index is compiled by CF Benchmarks Ltd. and is based on Bitcoin options pricing from the CME Group Caroline Mauron, co-founder of cryptocurrency derivatives liquidity provider Orbit Markets, said that the signals from the options market indicate that there is expected to be about an 8% two-way volatility the day after the voting ends, while normally there is only about a 2% fluctuation.

According to data compiled by Bloomberg, spot Bitcoin ETF investors dumped their chips the day before the election, with 12 funds experiencing outflows of $579.5 million on Monday, setting a historical high.

Bitcoin's increase in 2024 has exceeded 70%, surpassing traditional assets like global stocks and gold. Before the election became the market focus, Bitcoin's price was boosted this year by a significant influx of funds into ETFs. Data compiled by Bloomberg shows that funds from issuers like BlackRock and Fidelity Investments attracted about $23.6 billion in net inflows this year.

Industry Expectations

Executives in the cryptocurrency industry are optimistic that the stance of either candidate on digital assets will sharply contrast with the crackdown on the industry during the Biden administration, where many companies faced enforcement actions from the U.S. Securities and Exchange Commission (SEC).

Digital asset companies often complain that officials in the Biden administration have chosen the path of regulation through enforcement rather than establishing a clear new legal framework for the nascent market.

SEC Chairman Gary Gensler has been a critic of alleged violations in the industry, repeatedly stating that the sector is rife with fraud and misconduct. Following events such as the market crash in 2022 and the fraudulent bankruptcy of Sam Bankman-Fried's FTX exchange, the agency has cracked down on cryptocurrencies