As U.S. votes, Bitcoin flirts with $70k — which way will it break?

As a seasoned trader with over two decades of experience under my belt, I have seen my fair share of market volatility and unpredictability. The coming days are shaping up to be particularly interesting, with the U.S. elections and the Fed meeting on the horizon.

With the upcoming Federal meeting and elections on the horizon, will Bitcoin manage to break through the $70,000 mark, or will pessimistic factors prevent it from rising any higher?

Table of Contents

BTC teeters on the edge

As the U.S. presidential election approaches, the cryptocurrency market finds itself in a state of anticipation, closely monitoring each movement in Bitcoin’s (BTC) value as it nears the crucial threshold of $70,000.

Currently, as of November 4th, Bitcoin has encountered fresh obstacles around the $70,000 mark in its price movement. Just a few days prior, on October 29th, Bitcoin momentarily spiked to between $73,000 and $74,000, but a bearish trend subsequently caused it to retreat from those heights.

The situation is critical, as we approach both the elections and a crucial Federal Reserve meeting scheduled for November 6-7. This gathering holds significant importance since it’s anticipated that they will provide additional insights regarding the economy.

It’s noteworthy that according to Polymarket odds, Republican Donald Trump has a 59% likelihood of victory, which is lower than the previous high of 66% on October 30th. It seems that Bitcoin’s fluctuations might be connected to these changing election forecasts.

As of November 4, the probability that Kamala Harris, the Democratic nominee, will win has increased from 33% to 42%, right before the U.S. voters go to cast their ballots. The possibility of a Trump victory is being linked as positive for cryptocurrencies, which only adds to the excitement surrounding the upcoming elections.

As a researcher, I’m intrigued by the current state of Bitcoin, eagerly anticipating its next significant move. What might be the deciding factors that could propel or dampen its growth over the coming days? To shed light on this topic, let’s dissect the critical elements, speculate on potential market triggers, and delve into the insights shared by experts regarding Bitcoin’s trajectory in this action-packed week.

Key triggers for Bitcoin’s price ahead

The cryptocurrency market may continue to be unpredictable until the election results are announced, yet historical trends show a recurring pattern: Bitcoin tends to surge following every U.S. election since 2009.

Historical trends indicate that Bitcoin’s price following an election day has never returned to its previous level; instead, it usually reaches new highs within a year. Short-term fluctuations may differ, though.

Since Bitcoin has experienced a relatively small 7% growth following its last halving (compared to past cycles), some financial experts predict a potential long-term surge. This upward trend might even lead to fresh record highs if the upcoming election sparks prolonged investor attention.

Beyond the election, other key data points will shape Bitcoin’s path this week. 

Next week on November 7th, we anticipate the release of new jobless claims figures, which can provide valuable information about the U.S. job market. Last week’s numbers stood at 216,000, a decrease from the previous week’s 228,000, but forecasts suggest that this week’s data might show a slight increase to around 220,000.

An increase in unemployment claims might suggest a weakening job market, potentially reducing consumers’ spending habits and their investments in stocks and bonds.

In this situation, Bitcoin might become more appealing as a diverse investment option, particularly for individuals who aim to protect their assets from potential economic instability.

At the Federal Open Market Committee gathering scheduled for November 6-7, there’s a sense of heightened curiosity in the air. The Federal Reserve’s careful consideration of both inflation and employment has left the market pondering potential interest rate adjustments, and the speculation is running rife.

At the recent gathering, the Federal Reserve decided to lower interest rates by 0.5%, or 50 basis points, as inflation slightly decreased to 2.4%. This move brings us a step closer to their desired 2% inflation rate, which is a positive sign for me as a crypto investor, indicating potential stability and growth in the economy.

This year, unemployment rate has climbed up from 3.7% to 4.1%, indicating possible difficulties in the job market.

It’s widely expected among economists that the Federal Reserve will lower interest rates again. The CME’s FedWatch tool suggests a nearly certain chance of a 0.25 percentage point decrease.

A decrease in the Federal Reserve’s interest rate might serve as an optimistic sign for Bitcoin. Lower rates often diminish the attractiveness of conventional savings and investments, leading investors to consider riskier assets such as Bitcoin instead.

ETF inflows and liquidations paint a mixed picture

Leading up to the U.S. elections, Bitcoin’s performance has been somewhat ambiguous. The final month of October 2024 saw a more modest 10.76% increase compared to its much stronger 28.52% surge in October 2023. This suggests that investors are treading carefully, possibly holding off on making significant moves until they have a clearer understanding of the election results.

Over the last day prior to November 4th, the market experienced substantial selling off, resulting in a total erasure of $193 million worth of positions.

Upon further examination, it’s clear that a total of $101 million worth of long positions and $91 million of short positions were closed, suggesting an uncommon equilibrium between optimistic and pessimistic trades, as both bullish and bearish wagers were compelled to exit the market.

Nonetheless, Bitcoin suffered losses totaling more than $52 million. This amount was distributed between $21.05 million from long liquidations and $30.48 million from short liquidations. This indicates that although there’s some positive sentiment, it seems that bearish forces are persistently working against Bitcoin’s rising trend.

Furthermore, the general apprehensive atmosphere was also marked by a shift in Bitcoin ETF investments. After witnessing substantial inflows throughout October, these funds saw their initial outflows on November 1st, following a continuous influx since October 23rd.

On October 29th and 30th, I observed substantial influxes amounting to $827 million and $896 million respectively into Bitcoin ETFs. This suggests a robust initial interest in these investment products.

However, the current selloff could indicate that investors are taking short-term profits while they wait for more guidance from the upcoming elections and Federal Reserve meeting.

Is Bitcoin headed for a major move post-election?

In the current situation, Bitcoin is teetering at a pivotal point. The upcoming days may hold significant influence on its next major price movement.

Some traders, such as Daan Crypto Trades, anticipate a significant shift in Bitcoin’s price. In Daan’s view, “It’s likely that the price could experience a movement of at least 10% in either direction, based on who emerges victorious in the upcoming election.

In a broader perspective, the economy is experiencing stress, as evidenced by last week’s job report, which was the poorest in three years. This downturn in employment could signal the approach of a period of continuous improvement, potentially referred to as an “up only season,” if the Federal Reserve chooses to lower interest rates further, according to analysts like Michaël van de Poppe.

With Bitcoin recently testing key support, he cautions that “more volatility” is likely, implying further turbulence but potential buying opportunities if prices dip lower.

In fact, Spot On Chain notes that traditionally, a significant upward trend in Bitcoin’s price tends to occur following elections, irrespective of which political party emerges victorious.

Regardless of who wins the presidency between Trump and Harris, it appears that Bitcoin is expected to carry on its upward trend, potentially hitting the $100,000 milestone in the near future.

Should the Republicans secure victories in both the presidential office and Congress, experts at Standard Chartered predict that Bitcoin could potentially surge to an unprecedented $125,000 – a development that would represent a new peak for the cryptocurrency market.

However, it’s crucial to exercise caution amid this optimistic forecast. Despite the bullish predictions, the current market environment remains fragile, with macroeconomic headwinds that could dampen Bitcoin’s upside. 

The mixed economic signals, election results, and Fed policy shifts will likely dictate Bitcoin’s path. With potential gains come equal risks, and while the long-term outlook might look promising, the short-term road could be rocky. 

As always, caution and clear risk management are essential in a market bracing for drastic shifts. Trade wisely and never invest more than you can afford to lose.

Read More

Sorry. No data so far.

2024-11-04 19:50