As the United States gears up for the presidential election on November 5, the cryptocurrency market, particularly Bitcoin, is showing signs of significant volatility. A trader suggests that Bitcoin’s price could swing by at least 10% based on the election’s results, as the cryptocurrency’s volatility index hits a three-month peak.
Heightened Market Volatility
According to a pseudonymous trader, Daan Crypto Trades, who boasts nearly 389,000 followers on X, the Bitcoin market is entering a crucial phase. Despite a less than clean weekly close, he suggests that the impending election could overshadow typical market movements, potentially driving Bitcoin’s price to fluctuate markedly in either direction. Currently, Bitcoin is trading at $68,682, experiencing a slight 0.5% drop over the last 24 hours.
The volatility of Bitcoin reached a new high for the past three months on November 3, based on data from the crypto derivatives exchange Derebit. This uptick in volatility follows a period of intense trading that saw Bitcoin nearly reaching an all-time high of $74,649 on October 29, before it fell sharply due to uncertainties surrounding the election.
IG Markets analyst Tony Sycamore, in a November 4 investment note, emphasized that Bitcoin needs a sustained break above the $74,000 resistance level to confirm an uptrend that could potentially push its price towards $80,000. Conversely, a sustained drop below the $65,000 support level might indicate a failure of last week’s rally, potentially reverting Bitcoin back to a seven-month downward trend.
The outcome of the upcoming election is poised to influence Bitcoin’s trajectory significantly. Market experts are optimistic, anticipating positive movements for risk assets like Bitcoin, regardless of the election’s winner. Historically, crypto-friendly Donald Trump has been perceived as more bullish for cryptocurrencies in the short term due to his promises to protect and foster innovation within the U.S. crypto industry. On the other hand, Kamala Harris has been more reserved, only recently acknowledging the potential of digital assets and artificial intelligence on September 22, suggesting a supportive but less explicit stance towards cryptocurrency.
Federal Reserve’s Influence
Beyond the election, Bitcoin’s future will also be influenced by the Federal Reserve’s monetary policies. After a 50-basis-point cut on September 18, further rate reductions are expected. These cuts typically make traditional safe investments like term deposits less attractive, which could boost interest in higher-risk assets such as cryptocurrencies.
- Election Outcome: Expected to cause a 10% price swing.
- Federal Reserve Policies: Anticipated interest rate cuts could favor crypto investments.
- Market Sentiment: Generally bullish, regardless of the election winner.
Political Decisions on Cryptocurrency Markets
The sensitivity of Bitcoin prices to U.S. presidential elections highlights the intricate relationship between political decisions and cryptocurrency markets. This interconnection underscores the broader impact of governance on emerging technologies and financial markets. As cryptocurrencies continue to intertwine with traditional financial systems, the decisions made by political leaders will increasingly influence these digital assets. The potential for a 10% swing in Bitcoin’s price following the election is a stark reminder of the volatility and unpredictability inherent in the crypto markets, driven by both political sentiment and policy changes. For investors and market observers, these dynamics offer both a cautionary tale and an exciting glimpse into the volatile interplay between politics and digital currency valuation.
Featured image credit: Freepik
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