After hitting an all-time high [ATH] at $73,600, Bitcoin [BTC] started going downhill. In fact, it dropped to a low of $67,459 on November 3.
However, does this drop signal the return of a bear market or is it just a short-term correction?
Why is Bitcoin falling?
To answer this question, AMBCrypto took a closer look at BTC’s historical data and found that price drops may actually be the latter. For example, back in 2016, the cryptocurrency lost 10% of its value just days before the election.
Likewise, Bitcoin has lost 6.2% of its value in 2020. BTC’s ongoing decline appears to mirror past patterns, with Bitcoin now down more than 8% in value since the aforementioned highs.
Election-induced uncertainty
WeRate co-founder Quinten Francois shared a similar view, explaining that periods of heightened uncertainty before elections directly impact investor sentiment. He posted on X that,
"Financial markets don't like uncertainty. We're heading into election week and there's a lot of uncertainty. That's why the $BTC is down."
The founder of CryptoSea, also known as Crypto Rover, supports this view, saying,
“Bitcoin always crashes before US elections.”
It’s worth pointing out here that the cryptocurrency has recovered to trade just below $69,000 at press time.
What’s Next for Bitcoin?
The reason for the drop appears to be uncertainty surrounding the upcoming election, and the pressing question is – what’s next for the King Coin?
Well, previous patterns suggest that the post-election period marks the beginning of a bull market that will continue into the following year.
In 2016, two months after the election, Bitcoin rose about 60%.
Additionally, after the 2020 presidential election, the increase was approximately 150%.
Therefore, if history repeats itself, BTC could set new all-time highs in the coming months.
Finally, AMBCrypto’s analysis of Coinglass’ 1-year liquidation heatmap also hints at the possibility of more highs.
A strong liquidity cluster has formed around $74,000. This magnetic zone is likely to attract the price, marking a new high for the king coin.
Altcoin Outlook – Trump and Harris Victory
While a Bitcoin bull run is likely regardless of the election outcome, the outlook for altcoins varies. AMBCrypto previously reported that a Donald Trump victory could mean a more favorable environment for altcoins.
This is because a Republican administration is likely to ease cryptocurrency regulations. Clearer guidelines from the SEC on which altcoins qualify as securities could also spark a bull run in these assets.
Additionally, AMBCrypto noted that some altcoins could rise as Bitcoin investors reallocate profits after the election. Still, it remains uncertain whether there will be a lasting “altcoin season.”