Bernstein analysts have stated that Bitcoin's performance in the third quarter will be heavily influenced by macroeconomic conditions and political developments. In a note released Monday morning, Bernstein detailed that Bitcoin experienced a notable correction over the weekend, which continued into Monday. This correction was attributed to "fears in equity markets" and broader economic concerns rather than issues specific to the cryptocurrency sector.

Despite the recent volatility, Bernstein maintains a positive outlook on Bitcoin's long-term potential, noting, "We don't see any incremental negatives for crypto here. Bitcoin's institutional adoption trends—ETF inflows and wirehouse/bank approvals—remain on track."

Bernstein identified the upcoming U.S. presidential election as a significant short-term catalyst for the crypto markets. According to the analysts, "Bitcoin remains a 'Trump trade,'" with the cryptocurrency markets generally favoring Donald Trump as a crypto-friendly candidate.

The report suggested that the narrowing odds between Trump and Vice President Kamala Harris have contributed to the recent weakness in Bitcoin. Decentralized prediction market Polymarket shows 54% and 43% for Trump and Kamala respectively.

Regarding institutional involvement, Bernstein highlighted recent approvals from major financial institutions, stating, "We expect more wirehouse approvals into Q3 and Q4, thus providing further on-ramps for asset allocation to Bitcoin."

The analysts suggested that investors seeking exposure to a potential "Trump trade" could consider adding Bitcoin or Bitcoin-related equities to their portfolios. However, they also noted that if broader equity markets recover due to a Federal Reserve response, "we would expect Bitcoin and crypto markets to follow."