As a seasoned analyst with over two decades of experience in the financial markets, I have seen my fair share of market cycles and economic trends. The upcoming US presidential election is certainly a topic of interest for many investors, especially those who are keen on Bitcoin (BTC).
As the U.S. presidential election approaches, a lot of investors are keeping a close eye on the results and, particularly, how the outcome might influence Bitcoin.
Some predict Bitcoin will reach an extraordinary high of $100,000, while others believe it will only surpass a more modest threshold of $75,000, based on the fluctuations in the market.
Regardless of how the presidential election turns out, numerous cryptocurrency experts predict that Bitcoin’s volatility will not be significantly impacted by the election results. This is due to factors such as market trends, intrinsic fundamentals, and broader economic conditions that have a constant influence on Bitcoin.
As per CK Zheng, the head of investment at crypto hedge fund ‘ZX Squared Capital’, although the escalating debt and deficit problem in the country remains unaddressed by any political party, there’s a possibility that Bitcoin could see positive effects following the election.
Zhengs pointed out that historically, Bitcoin’s halving in April has tended to lead to profitable Q4s (fourth quarters). However, an important matter that could potentially boost Bitcoin hasn’t been discussed by any of the U.S. presidential candidates yet.
Historical Trends and Market Cycles
To put it simply, while major US stock indices have seen significant growth over the past decade, they pale in comparison to Bitcoin’s astronomical rise. Since 2011, Bitcoin has skyrocketed more than 23,000,000%, a figure that far surpasses the growth of other major US stock indices during the same period. For instance, these indices expanded by approximately 282% and 541% respectively, with the Nasdaq 100 Index being the top performer among them. However, even the Nasdaq 100 couldn’t keep up with Bitcoin, as its average annual return was only about 230%, a figure that is ten times lower than Bitcoin’s impressive rate of return.
Bitcoin has historically gained traction following US elections, and this trend continued in 2020, even amidst election uncertainties. GrayScale’s analysis revealed that more than half (55%) of American investors were considering investing in Bitcoin in 2020. This is a significant jump from the 36% who showed interest in 2019, indicating a clear upward trend. Zheng predicts this pattern won’t change this time around.
Additionally, as per data from CoinGlass, it’s a common pattern for Bitcoin to experience significant growth during the last three months of the year. This surge has been more than 50% on six separate occasions since 2013. Notably, years when Bitcoin halving events occur tend to amplify these positive trends.
In the final three months of 2020, there was a staggering 168% rise in Bitcoin prices, which coincided with the Bitcoin halving event. Notably, this period also marked the year of the United States’ presidential election.
Economic Factors at play
If the United States manages a “gentle recession,” as Zheng suggests, this Fed’s “bold” reduction of 50 basis points in interest rates could potentially be beneficial or encouraging for Bitcoin and other high-risk investments.
Central banks aim to strike a balance by setting interest rates at levels that prevent the economy from experiencing excessive inflation due to overheating, yet avoid causing a recession or economic downturn. Their goal is to achieve smooth and controlled transitions, often referred to as “soft landings.
Zheng thinks that if the Federal Reserve achieves its goals, there’s likely to be a significant link between Bitcoin’s price and the NASDAQ.
The best #Bitcoin performance after the halving always comes in Q4…
— Crypto Rover (@rovercrc) September 28, 2024
It’s expected that there will be an influx of money from institutions, as the idea of Bitcoin as “digital gold” and a protective measure against economic turbulence gains popularity.
However, some experts advise against focussing only on price changes, though. The CEO and creator of Web3 PR agency YAP, Samantha Yap, highlights the significance of the media attention and retail interest that frequently accompany Bitcoin rallies.
Final Thought
It’s expected that the upcoming Bitcoin halving in April 2024 could influence the behavior of cryptocurrencies as well. Historically, such events have been associated with a decrease in the creation rate of new Bitcoins, and this reduction has often been followed by price increases.
Zheng anticipates that Bitcoin could reach a fresh peak in Q4, or possibly soon afterward. However, he notes that the value of Bitcoin may strongly correlate with the NASDAQ index, should the Federal Reserve manage a soft economic landing.
As per the latest figures, the value of a single Bitcoin is approximately $65,000 at present, marking an increase of more than 136% compared to its price over the past year. Even though there has been some short-term fluctuation, many experts in the field remain optimistic about Bitcoin’s potential growth in the near future.
Read More
Sorry. No data so far.
2024-09-30 16:04