Bitcoin has experienced significant volatility, experiencing a downtrend that began in mid-March, falling drastically about 26%, before reversing the trend in early September.

Since the trend reversal, the digital currency has gained about 26% (as of Oct. 17) and is on track to hit its highest level since July, resulting in an encouraging outlook for the asset in the short and the long term.

With the U.S. Presidential elections just a few weeks away, the crypto market is starting to show positive signs. With both the Presidential candidates, talking about favorable changes to crypto regulations in the world’s largest economy, Bitcoin has taken center stage as a key asset to navigate the current landscape of uncertainty.

Donald Trump, widely seen as the more openly pro-crypto presidential candidate, has pledged to transform the United States into the “crypto capital of the world.” Meanwhile, Vice President Kamala Harris also holds a favorable view of the crypto market, seeking to ease the Biden administration’s stringent stance on cryptocurrencies, which adds fuel to the growing optimism.

Regardless of whether Trump or Harris wins, the outlook for cryptocurrency is positive. A Trump victory could lead to more lenient policies, while a Harris win is also expected to benefit the industry. This would create a win-win situation for the crypto market and make it a crucial sector to monitor in the final weeks leading up to the election.

Larry Fink, Blackrock CEO, also holds the same view. According to Fink, as quoted on The Crypto Times, regardless of the outcome of the upcoming elections, Bitcoin's upward trajectory will continue uninterrupted.

However, while the election outcome may be favorable for crypto in either way, the digital asset is poised to benefit even more if Trump secures a second term. The victory of Trump, who has been more outspoken about accepting digital currencies, would result in a rise in market expectations of the government adopting a strategic Bitcoin reserve.

Data-Driven Crypto Hope

Bitcoin, referenced by both Trump and Harris in their speeches, has gained about 12% since the start of October, outpacing SPDR S&P 500 ETF Trust’s (SPY) 2.4%. Bitcoin is not the only digital currency showing the same trend. Ether (ETH) follows suit, having regained momentum in early September after falling about 45% since early March. ETH has increased around 11% since early October.

Adding to Wall Street's growing embrace of the asset, approximately 20% of American adults now own at least one cryptocurrency, according to CoinGape. Additionally, the recent surge in the digital currency has resulted in Bitcoin becoming the tenth-largest asset globally, boasting a market cap of $1.34 trillion, according to CoinMarketCap data, as quoted on CoinGape.

Beyond Politics: Key Trends Powering Crypto’s Bullish Streak

There are additional factors that contribute to an optimistic outlook for long-term investment in cryptocurrency. Increasing bets of interest rate cuts by the Fed make cryptocurrency favorable. The greenback's value tends to move inversely with Fed’s interest rate adjustments, resulting in decreased demand for the currency and creating opportunities in digital currencies.

Investors may view Bitcoin as an alternative to the depreciating dollar. Moreover, any Fed rate cut would boost risk-on sentiments, which, in turn, would help Bitcoin prices. This may push Bitcoin into bullish territory.

Growing interest from institutional investors is also driving the momentum. According to The Crypto Times, BlackRock, the world’s largest asset manager, added Bitcoin worth $391.8 million to its holdings, taking BlackRock’s total Bitcoin holdings north of $25 billion. This sends a positive signal to the market, reflecting the world’s largest asset manager's confidence in digital currency.

ETFs to Consider

Below, we have mentioned a few ETFs for investors to increase their portfolios’ exposure to digital currencies, positioning themselves to benefit from both the U.S. presidential election and the long-term bullish trend in digital assets.

For investors with a long-term horizon, increasing exposure to digital currencies now, when prices are comparatively low and expected to rise further, can be a smart strategy. Even for investors looking to navigate the uncertainty of the upcoming election, Bitcoin ETFs can safeguard one's portfolio.

IShares Bitcoin Trust (IBIT)

IShares Bitcoin Trust has gained 7.57% over the past month and 5.04% over the past three months.

Grayscale Bitcoin Trust (GBTC)

Grayscale Bitcoin Trust has gained 7.86% over the past month and 108.58% over the past year.

Fidelity Wise Origin Bitcoin Fund (FBTC)

Fidelity Wise Origin Bitcoin Fund has gained 7.6% over the past month and 5.23% over the past three months.

ARK 21Shares Bitcoin ETF (ARKB)

ARK 21Shares Bitcoin ETF has gained 7.58% over the past month and 5.05% over the past three months.

Bitwise Bitcoin ETF Trust (BITB)

Bitwise Bitcoin ETF Trust has gained 7.58% over the past month and 5.06% over the past three months.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

To read this article on Zacks.com click here.

Zacks Investment Research