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Summary Trump's election victory could benefit Bitcoin, especially with his recent promises for the crypto market. It is interesting to note that the volume has not followed the rise in bitcoin in this second half of the year, unlike what happened in March. When we analyze Bitcoin's seasonality, we see that this could be a great investment opportunity. Investment Thesis I recommend buying the Franklin Bitcoin ETF (EZBC). The US elections are approaching with Trump favored in most swing states, including the "Trump Trade", which is apparently being reflected in the DXY, and so a confluence may be forming around Bitcoin ( BTC-USD ). Trump has repeatedly demonstrated promising plans for cryptocurrencies. Although bitcoin is close to its highs, its volume is still low, and seasonality indicates that there is room for greater capital flows into the cryptocurrency, which could be a great investment opportunity. Franklin Bitcoin ETF The Franklin Bitcoin ETF seeks to replicate the performance of bitcoin, making it a big draw for investors looking for traditional exposure to the cryptocurrency's price. Let's take a look at the holdings. Holdings (Franklin Templeton) With this ETF, investors do not need to open accounts on exchanges and manage digital assets, making the investment process more convenient. The management fee is 0.19%. After this introduction, let's move on to the thesis. Why Invest In ETF And Not Directly In Bitcoin? Investing in bitcoin through the EZBC ETF brings a number of advantages. The ETF has a very competitive management fee of 0.19%, and other peers such as the Fidelity Wise Origin Bitcoin Trust (BATS: FBTC ) or the Grayscale Bitcoin Trust (NYSEARCA: GBTC ) have management fees of 0.25% and 1.5% respectively. Other advantages include simplicity, as it eliminates the need to manage a portfolio of digital assets on an exchange. Finally, the ETF is registered under the Securities Act of 1933 and is offered by Franklin Templeton, which gives it an additional layer of security. The Elections and Their Implications For Bitcoin It is noticeable that the future of Bitcoin looks much more promising with the possible election of Donald Trump, at least if we analyze his latest statements . In this sense, Trump seems to be the favorite to win the election, given the latest polls in the swing states. Trump Pulls Ahead in Battleground States (Statista) Another indicator of market tension, and one that possibly indicates an advantage, is the DXY. As we can see below, the dollar versus a basket of currencies is appreciating in what the market has called the "Trump Trade". Fed Fund Rate 2024e (%) vs DXY (pts.) (BTG Pactual) Interesting Signs When analyzing this data regarding the elections, I was quite intrigued, and I went looking for more data to delve deeper into the analysis. What really caught my attention was that Bitcoin is at its all-time highs, but the volume is still very low. Price x Volume (The Block) Therefore, we have two options in my view: The volume is low, and the price will fall, or Bitcoin will come back into fashion, and with the volume returning, the cryptocurrency will skyrocket even more. It seems to me that the price will rise further due to another piece of data that I will show below. Seasonality In Bitcoin? The black line below shows the seasonality of Bitcoin prices based on average returns between 2012 and 2023. The red line shows Bitcoin's performance in 2024, and compares it to the historical average. Let's take a look below. Bitcoin Price Seasonality (Topdown Charts, LSEG) As we can see, Bitcoin has been showing strong seasonal performance in November and December. Furthermore, the current pattern suggests that it should continue to rise if this trend continues. This supports my recommendation to buy the Franklin Bitcoin ETF. Potential Threats To The Bullish Thesis One of the risks to my thesis is that, when looking for an ETF, the investor is usually looking for diversification. This is not the case with the Franklin Bitcoin ETF, so investors should be extra careful in their analysis. As for Trump's election being a trigger for the rise of Bitcoin, it is important to remember that election results are unpredictable, and there are also polls indicating a victory for Kamala Harris. Bitcoin is at its all-time highs, which means that much of the safety margin for investment is already gone. Additionally, the liquidity of this ETF may be a problem for large investors, given that the assets under management are around $522 million. Finally, the investor will not be buying Bitcoin directly, which means the net return will be slightly lower than what Bitcoin itself could provide. Finally, the investor would not be able to use it in financial transactions. The Bottom Line If Trump wins the US election, a series of combinations could occur that would make the price of Bitcoin rise even further, especially with the latest statements by the US presidential candidate. It is very striking that the Bitcoin volumes that followed the highs of March are not following the highs of October. However, when we analyze seasonality, we see that this could be an opportunity. Based on this analysis, I recommend buying the Franklin Bitcoin ETF. In my view, although the asset is at all-time highs, there is an opportunity for its prices to rise even further with the combination of factors reported.
