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What We See in the Markets: Markets vs Polls - Crypto's Election Conviction

Institutional Research Partner - Cumberland

Keep up with the latest in crypto research as we share the insights from leading institutional research players.

In this edition, we share what Cumberland sees in the markets with the upcoming US Presidential election and the divergence between polling and crypto market sentiments.

Good Morning from Cumberland APAC! The US presidential election is a week away, and it’s the only story that crypto markets are following. Most of the polling data has this as a close race, with a slight but not insignificant advantage to Trump. While Harris leads slightly in the national polling average, it’s the swing states that will end up mattering. In the most recent polls, it’s essentially even in Wisconsin, Nevada, and North Carolina, Harris leads slightly in Michigan, and Trump leads in Pennsylvania and Georgia. Crucially, all of these are well within the polling margin of error; either candidate could end up sweeping all six. From the polling data alone, this looks on paper to be the closest race in recent memory.

Markets, however, are not treating it that way. The most notable example of this is Polymarkets, which now has Trump as a two-to-one favorite. This market was even at the beginning of the month, but has moved in one direction over the past thirty days. There’s pretty good evidence that this move was pushed by a handful of large wallets, but this is no longer isolated. Over the course of the past week, BTC has rallied within spitting distance of its all-time-highs, clearly reflecting a market view that crypto-friendly Republicans will be in office. DOGE is up 23% on the week; if Trump wins, Elon Musk will likely head the still-to-be-formed Department of Governmental Efficiency (get it?). Trump Media Group (Truth Social) has bounced from $12 a share at the start of the month to $51, as good a proxy as we will get for what markets think will happen next week. The polls might be close, but the market doesn’t generally trust polls, and the market is showing conviction here.

It’s possible that the market, and the crypto market in particular, is showing too much confidence in a Trump win; it also might be overly confident about what a Trump win would mean for the price of crypto. While regulation drives adoption, and adoption drives price, it has historically been monetary liquidity which has had the most meaningful impact on crypto prices, and the two parties are largely similar in monetary policy and deficit spending. This rally is showing a lot of confidence in not only what will occur next week, but what it will mean, and overconfident markets tend to face corrections, especially when they’re leveraged. BTC vol expiring after the election is trading around 67, the highest we’ve seen in the past year, and OTC options markets have been trading with high volume, so traders are locked-in, with all eyes on the election. Happy trading!

Disclaimer

The information (“Information”) provided by Cumberland DRW LLC and its affiliated or related companies (collectively, “Cumberland”), either in this document or otherwise, is for informational purposes only and is provided without charge. Cumberland is a principal trading firm; it is not and does not act as a fiduciary or adviser, or in any similar capacity, in providing the Information, and the Information may not be relied upon as investment, financial, legal, tax, regulatory, or any other type of advice. The Information has not been prepared or tailored to address, and may not be suitable or appropriate for the particular financial needs, circumstances, or requirements of any person, and it should not be the basis for making any investment or transaction decision. THE INFORMATION IS NOT A RECOMMENDATION TO ENGAGE IN ANY TRANSACTION.

If any person elects to enter into transactions with Cumberland, whether as a result of the Information or otherwise, Cumberland will enter into such transactions as principal only and will act solely in its own best interests, which may be adverse to the interests of such person. Before entering into any such transaction, you should conduct your own research and obtain your own advice as to whether the transaction is appropriate for your specific circumstances. In addition, any person wishing to enter into transactions with Cumberland must satisfy Cumberland’s eligibility requirements. Cumberland may be subject to certain conflicts of interest in connection with the provision of the Information. For example, Cumberland may, but does not necessarily, hold or control positions in the cryptoasset(s) discussed in the Information, and transactions entered into by Cumberland could affect the relevant markets in ways that are adverse to a counterparty of Cumberland. Cumberland may engage in transactions in a manner inconsistent with the views expressed in the Information.

Cumberland makes no representations or warranties (express or implied) regarding, nor shall it have any responsibility or liability for the accuracy, adequacy, timeliness, or completeness of, the Information, and no representation is made or is to be implied that the Information will remain unchanged. Cumberland undertakes no duty to amend, correct, update, or otherwise supplement the Information.

The virtual currency industry is subject to a range of risks, including but not limited to: price volatility, limited liquidity, limited and incomplete information regarding certain instruments, products, or cryptoassets, and a still emerging and evolving regulatory environment. The past performance of any instruments, products, or cryptoassets addressed in the Information is not a guide to future performance, nor is it a reliable indicator of future results or performance. Investing in virtual currencies involves significant risks and is not appropriate for many investors, including those without significant investment experience and capacity to assume significant risks.

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The information provided in this document by Cumberland DRW LLC is for informational purposes only and does not necessarily represent the views of OKX. Any additional disclaimers issued by these third parties are also applicable and should be considered as part of this document.

This report is not intended as financial advice, investment recommendation, or an endorsement of specific trading strategies. The contents of this report, including but not limited to any graphs, charts, and numerical data, are provided “as is” without warranty of any kind, express or implied. The warranties disclaimed include but are not limited to performance, merchantability, fitness for a particular purpose, accuracy, omissions, completeness, currentness, and delays.

The cryptocurrency markets are highly volatile and unpredictable, subject to substantial market risks including significant price fluctuations. The strategies, opinions, and analyses included are based on information available at the time of writing and may change without notice. They are also based on certain assumptions and historical data that may not be accurate or applicable in the future. Therefore, reliance on this report for the purpose of making investment decisions is at your own risk.

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Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions. The inclusion of any specific cryptocurrencies or trading strategies does not constitute an endorsement or recommendation by OKX.

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