According to 10x Research: Last week, Bitcoin traders faced a whirlwind of economic and political events that reshaped market narratives and left many wondering what’s next for the cryptocurrency. As old stories fade and new ones begin to emerge, it’s clear that the market’s focus is shifting, and traders are adapting to the changes. Here’s what happened and what to watch for in the coming weeks.
Market Narratives in Flux: Interpreting trends becomes particularly challenging during pivotal moments in the economy and financial markets. Old narratives are being questioned, and new ones are gradually taking shape. Traders and investors must pay close attention to the market’s signals, as the focus tends to shift from one prevailing narrative to the next. Understanding this dynamic is crucial for navigating these transitions effectively.
Political Drama Fuels Market Volatility: The market’s concerns shifted in late June following a German supply overhang, moving quickly to the impending Mt. Gox payouts in early July. But the narrative took a dramatic turn with the attempted assassination of Donald Trump and his selection of Bitcoin holder JD Vance as his vice-presidential pick. As Trump’s election odds surged to 70%, Bitcoin’s price became closely tied to these political developments. However, the momentum stalled on July 21 when President Biden exited the 2025 U.S. Presidential Race.
Struggling to Break $70K: Another push to break the $70,000 mark came after discussions of a potential Bitcoin Strategic Reserve, fueling high expectations for Trump’s speech at the Nashville Bitcoin conference. Unfortunately, the speech failed to live up to the hype. Bitcoin peaked when the U.S. government transferred $2 billion worth of Bitcoin, marking the end of its rally. The $60,000 to $70,000 trading range has held steady, but traders are now bracing for a potential shift in this range.
Economic Weakness Raises Concerns: The narrative then shifted towards fears of economic weakness as the ISM Manufacturing Index—a key leading indicator for the U.S. economy—plunged sharply. This decline was coupled with a sustained rise in the U.S. unemployment rate, which tends to fluctuate in large cycles. Additionally, disappointing revenue guidance from major U.S. tech companies following late July earnings announcements has heightened fears of a deeper economic downturn. However, macroeconomic data evolves slowly, with critical updates not expected until early September.
Political Shifts and Market Reactions: Although the early July rally was fueled by the attempted assassination of Trump and his improving election odds, those odds are now reversing. Efforts like the ‘Harris For Crypto’ initiative seem aimed at courting less informed voters, but significant moves to shift the SEC towards a more crypto-friendly stance have yet to materialize. The Democratic leadership’s decision to remove a sitting U.S. President from the 2025 election race signals a significant power play, but even if Harris were more favorable to crypto, a less powerful SEC Chair would likely be easier to influence.
Upcoming Debate and Economic Data: The Harris campaign has yet to define its core platform clearly, and the upcoming debate between Harris and Trump on September 10 will coincide with critical early September data releases, including the ISM on September 2 and employment data on September 6, followed by the Fed meeting later in the month. While business leaders have generally shown indifference toward the occupant of the White House, a Harris presidency would likely maintain the SEC’s current stance on crypto. Her approach might need to be more progressive, especially given the assertive crypto-friendly positions many took when Trump was leading in the polls.
Regulatory Pressure Mounts: On Friday, August 9, the Fed ordered the crypto-friendly bank Customer Bank to limit risks from digital asset clients and agreed to tackle the regulator’s concerns that it had strayed from proper compliance. Customer Bank, which deals with Galaxy Digital, Coinbase, and Circle, among others, was found to have been too relaxed around anti-money laundering rules.
Market Response to Political Odds: After Bitcoin closed the CME gap between the Friday, August 2 close and the Monday, August 5 open, the weakness observed on Monday, August 12, can be linked to Harris’s presidential odds rising to 51%, compared to Trump’s 46%, according to betting markets. Historically, the late summer of U.S. election years often sees market corrections as uncertainty about the election outcome increases.
Stock Market Patterns and Bitcoin’s Risk: Stocks typically peak in mid-July and show weakness in August and September; recent movements have closely followed this pattern. This suggests a risk of further price dips heading into September, especially with elevated election-related risks or the emergence of new threats. Another potential risk could be a military event involving Iran, though its impact on Bitcoin is less predictable.
ETF Behavior and Market Sentiment: Unlike previous dips below $60,000, ETFs did not seize the opportunity to buy the dip this time and instead became net sellers, with $350 million in outflows this month. Bitcoin has not reacted strongly to last month’s CPI decline, as lower inflation is now primarily anticipated. The market’s focus has shifted toward growth prospects and the upcoming election. Therefore, we shouldn’t expect a significant rally if the CPI falls below 3.0% this week. However, a higher CPI number could raise concerns about stagflation, suggesting the Fed may hold off on aggressive rate cuts due to persistent inflation.
Will the Trading Range Shift? It seems unlikely that Bitcoin will break out to new all-time highs soon, and the risk could be more to the downside. However, the most critical question for Bitcoin traders is whether the $60,000 to $70,000 trading range is still valid or has shifted downward to $50,000 to $60,000. Although Bitcoin successfully tested the January Bitcoin ETF high with its Monday, August 5 drop to $49,100, the trading range might have shifted lower as Bitcoin ETF buying has slowed and stablecoin inflows have only temporarily resumed this week.
Navigating Uncertainty: While many narratives have driven Bitcoin during the last month, there appears to be an overhang of uncertainty that will take (at least) until September to clear out—economic strength, Fed rate cut confirmation, and the U.S. Presidential Election. In this environment, a short-term tactical approach might be the best way to generate returns. Bet when the odds are in your favor and take profits quickly.
