Bitcoin Returns Under Various US Presidents

Key Concepts

• Diminishing Returns: The economic principle where, as an asset class grows in market capitalization, the percentage of growth tends to decrease over time.
• Macro Headwinds: Broader economic factors (such as inflation, unemployment rates, or currency strength) that negatively impact the performance of risk-on assets like Bitcoin.
• DXY (US Dollar Index): A measure of the value of the United States dollar relative to a basket of foreign currencies, used here as a benchmark for market trends.
• Risk-on Assets: Financial assets, including cryptocurrencies, that tend to perform well when investor confidence is high but struggle during periods of economic uncertainty or high inflation.
• Counter-trend Rally: A temporary price movement that goes against the prevailing long-term trend.

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1. Comparative Analysis of Bitcoin Performance Under Presidencies

The analysis highlights that Bitcoin’s performance is often less about the specific political administration and more about the prevailing macroeconomic environment.

• Historical Groupings:
  • Group A (Obama’s 2nd Term & Trump’s 1st Term): Bitcoin experienced significant growth during these periods. Despite different political landscapes, the end-of-term returns were remarkably similar due to a late-term surge in Trump’s first term.
  • Group B (Biden’s Term & Trump’s 2nd Term): These periods show a striking similarity in underperformance. At the 524-day mark, Bitcoin’s return under Biden was -43.8%, while under Trump’s current term, it sits at -41.1%.
• The "Diminishing Returns" Factor: The speaker notes that Bitcoin’s underperformance in later years compared to earlier years is likely a function of its increasing market cap rather than political policy.

2. Macroeconomic Drivers

The speaker argues that the shift in performance between the two groups is primarily driven by macro factors:

• Inflation and Unemployment: During the earlier periods, inflation and unemployment were less significant concerns. In the more recent periods, these factors have acted as "macro headwinds," creating a challenging environment for risk-on assets.
• Market Psychology: The speaker emphasizes that while politics often "warps" the view of assets, the data suggests that Bitcoin’s price action is largely agnostic to the political party in power.

3. The DXY (Dollar) Correlation

A significant portion of the analysis focuses on the US Dollar Index (DXY) as a mirror for market cycles:

• Cyclical Symmetry: The DXY’s behavior in Trump’s second term is mirroring his first term almost exactly. In both instances, the dollar sold off upon his inauguration, formed a base, and then began a "begrudging" climb.
• Technical Parallels:
  • 2017 vs. 2025: Both periods saw a top in January.
  • 2018 vs. 2026: Both periods saw a bottom in the January/February timeframe.
• Forecast: The speaker predicts the dollar will likely head toward the 105–106 range, which may continue to serve as a headwind for crypto markets later in the year.

4. Predictive Outlook

Based on the historical patterns observed in the previous cycle, the speaker outlines a potential roadmap for Bitcoin:

• Stalling and Consolidation: The current market is expected to follow the previous cycle's path: a summer stall, a brief counter-trend rally, a subsequent sell-off, and the formation of a final cycle low.
• Future Bull Market: If the current cycle continues to mirror the previous one, the expectation is for Bitcoin to bottom out later in the year, followed by the commencement of a new bull market leading into 2027.

5. Notable Quotes

• "It’s easy to let politics warp your view of certain assets, but what’s fascinating is Bitcoin’s return under both Biden and Trump has been really similar."
• "It’s remarkable how similar it is... despite all the political differences, the return for Bitcoin at this point in Trump’s presidency is actually nearly the same as it was under Biden’s presidency."

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Synthesis and Conclusion

The core takeaway is that Bitcoin’s price action is heavily influenced by macroeconomic cycles—specifically inflation and the strength of the US Dollar—rather than the specific political agenda of a US President. By comparing the current cycle to previous ones, the speaker demonstrates a high degree of technical correlation in both Bitcoin and the DXY. The analysis suggests that investors should look past political narratives and focus on the cyclical nature of the market, with the expectation that the current "headwind" phase will eventually transition into a new bull market cycle by 2027.