Bitcoin may have hit a local bottom during the global market rout on Aug. 5, when its price fell to a six-month low of around $49,500.
This potential bottom is consistent with historical patterns observed in previous U.S. election years, with Bitcoin consistently posting local lows in the third quarter, typically around July or August.
Could Bitcoin hit new highs before the election?
Bitcoin has experienced strong upward momentum following bottoming in 2012, 2016, and the third quarter of 2020, typically resulting in prices rising to all-time highs following the U.S. presidential election.
Given this historical precedent, expectations are growing that Bitcoin could resume its upward trend as we approach the November 2024 election, which will be a high-stakes contest between Donald Trump and Kamala Harris.
SuperBro cites the “left-shift cycle” theory to reinforce his bullish outlook for Bitcoin. The theory states that Bitcoin’s bullish cycle starts earlier and could peak earlier than previous cycles.
The key piece of evidence supporting this theory is that Bitcoin’s recent peak occurred a month before the fourth halving in April 2024. This is unusual compared to past cycles, where peaks typically occurred after halving events.
If the left-shift cycle holds true, Bitcoin could start to rise sooner than traditional market participants expect, potentially setting new highs before the election. This could catch the “mid-curve” — or those who are slower to adapt to changing market dynamics — off guard.
Therefore, if these investors wait too long, they may be excluded and miss the initial stages of the stock market rally.
Fundamentally, Trump’s positive stance on Bitcoin and possible regulatory changes under different administrations could spur speculative buying, accelerating price increases.
According to Polymarket, Trump's odds of winning have improved.
Bitcoin on-chain data shows profit-taking is declining
According to Glassnode’s latest weekly report, long-term Bitcoin holders (LTH) continue to lock in approximately $138 million in profits every day amid the recent flat trend.
This steady profit-taking suggests that a large amount of capital is entering the market every day to absorb this selling pressure, allowing the price of Bitcoin to remain relatively stable in a volatile environment.
Meanwhile, the realized profit-loss ratio, while still elevated, has shown signs of a significant decline from its peak, suggesting that LTH is beginning to see less profit-taking activity.
Historically, the indicator reaches highs when the market reaches its peak and declines before the market resumes its upward trend, as seen in the 2013 and 2021 cycles.
The combination of a decline in realized profit/loss rates and historical patterns in LTH behavior suggests Bitcoin could rally in the months leading up to the election.
Bitcoin bull flag points to $80,000
From a technical perspective, Bitcoin could see a bull flag breakout in the run-up to the U.S. presidential election.
BTC’s price has been showing a bull flag pattern since March, which was confirmed by its correction within a descending parallel channel, followed by a strong uptrend.
Generally speaking, if Bitcoin price decisively breaks above the uptrend line of the flag, this pattern increases the likelihood that Bitcoin will continue its bullish momentum. If this happens, its bull flag breakout target will be measured by adding the previous uptrend height to the breakout point.
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