As the 2024 U.S. presidential election approaches, we’re bracing for significant volatility in the markets. The election is generating uncertainty, leading to noticeable price drops. Here’s a detailed analysis of the current situation and what to expect after the election, with a focus on the cryptocurrency market.
Pre-Election Market Dynamics
📌Equities and Crypto Pullbacks:
Recent sessions have seen a decline in risk assets, primarily due to traders shifting to a defensive mode and taking profits ahead of the election.
Uncertainty about the election results has increased tension in the market, making investors more cautious.
📌Bitcoin's Retreat:
BTC has decreased from its recent high of $73K, currently around $68.5K
This retracement reflects broader market caution, though signs of stabilization are emerging as spot order books begin to favor buying again.
📌Reduction in Open Interest (OI):
Since BTC dropped from $73K to around $68K, nearly $3B in OI has been closed within 7 days. This is understandable as most traders are taking profits and getting liquidated.
This is expected to create conditions for a more stable market structure, bringing the market closer to equilibrium as the election approaches.
📌Social Sentiment
Kamala Harris is dominant in popular related topics in News and Media.
Conversely, Donald #Trump is more attractive to candidates in Google Trends searches (60%). The keyword search for "Who will win?" is higher on Trump's side in Google searches (Trump:Harris = 60:40).
Moreover, Trump and Democracy are getting 100% support from Elon Musk @elonmusk! In an interview, he stated, 'If Trump doesn’t win, I think this will be the last election.'
This means that Harris receives strong support from the Media and News, while Trump captures more attention from the public.
Election Outcome Scenarios
1. Trump (@realDonaldTrump) Win:
Crypto Market Reaction: A positive response is anticipated, particularly for BTC. The market expects regulatory shifts that could favor the crypto industry.
BTC Performance: Likely to see sharp gains, with initial market focus heavily on BTC before capital flows into altcoins.
Altcoins: Expected to rise alongside BTC, though the initial surge will likely see BTC taking the lead.
2. Harris (@KamalaHarris) Win:
Crypto Market Reaction: A more subdued or negative response is expected, with BTC facing potential short-term declines.
BTC Performance: While a drop is likely, it is not expected to breach prior lows significantly.
Altcoins: Could face more substantial drawdowns than BTC, reflecting greater sensitivity to regulatory outcomes.
Post-Election Outlook
📌Macro Backdrop:
The Federal Reserve's dovish stance, with expected rate cuts, and the nearing end of quantitative tightening are seen as supportive for crypto.
Expanding fiscal deficits and possible liquidity injections into the private sector are anticipated to benefit liquidity-sensitive assets like BTC.
📌Institutional Adoption:
By 2025, an increase in institutional investment in BTC and ETH ETFs is expected. This trend reflects growing confidence and interest in crypto from major financial players.
The U.S., being a tech-driven market, may see a preference for ETH over BTC among institutions, potentially leading to ETH outperforming BTC in 2025.
📌Strategic Market Positioning
Investment Focus:
Maintaining a bullish outlook on $BTC, with expectations of surpassing the $100K mark in the longer term.
Emphasis on holding $SOL and selective altcoins, balancing between BTC dominance and promising altcoin opportunities.
The strategy involves adapting to market conditions while staying committed to assets with strong upside potential.
✍️ Conclusion
The impending election is a critical juncture for markets, particularly for the crypto sector. While short-term volatility is expected, the longer-term outlook remains optimistic. Investors are advised to prepare for potential market shifts and capitalize on the opportunities that emerge in the aftermath of this significant event.
#Elections
#Vote2024
#Trump
#Harris