The Future of Bitcoin

17 Eylül 2024

The Future of Bitcoin: Will Donald Trump Revolutionize the Cryptocurrency Market with the Launch of Liberty Financial?

Today’s market analysis on behalf of Rania Gule Senior Market Analyst at XS.com

Bitcoin experienced a modest correction yesterday, opening today, Tuesday, at $58,876, recording a 1% decline and stabilizing below the critical psychological level of $60,000. This pullback comes after notable gains made by Bitcoin on Friday, though it has lost nearly 3% since the opening of Saturday’s trading. In my opinion, this volatility in Bitcoin’s price shows signs of weakness in maintaining gains, reflecting a sense of caution among investors. The Fear & Greed Index, which measures market sentiment, has returned to “fear” levels, indicating increased caution and uncertain future expectations.

Although Bitcoin has seen a modest correction, the market is still witnessing profit-taking sales. According to data from Santiment, the realized gains amounted to around $720 million between September 10 and 16. I believe this indicates that traders are capitalizing on previous gains, while the $60,000 level remains a hurdle. Bitcoin’s failure to hold above this level increases the likelihood of continued volatility in the near term, especially with the return of negative sentiment among traders.

The potential victory of Donald Trump in the Polymarket suggests significant impacts on the cryptocurrency market. In my view, Trump has successfully garnered attention from the crypto sector by accepting donations in cryptocurrencies and dedicating part of the Republican Party’s platform to these assets. He also announced the launch of a new crypto platform called World Liberty Financial, which has gained widespread traction in the crypto community, with its Telegram page attracting nearly 150,000 members.

Therefore, I expect that Trump’s victory could push Bitcoin’s price to $80,000, while a win by Kamala Harris could lead to a decline in top assets by over 60%. This divergence in expectations stems from investor sentiment in the crypto market towards the two administrations. While Trump has garnered significant support from the cryptocurrency community, the Democrats and Kamala Harris have not received the same level of backing. This is due to Harris’ campaign’s lack of clarity regarding its stance on cryptocurrencies, alongside previous actions against crypto firms that have alarmed investors.

It seems to me that this week will be one of the rare weeks where markets remain uncertain about the Federal Reserve’s next move on interest rates. This uncertainty has limited the potential recovery in Bitcoin’s price. It is widely expected that the Federal Reserve will announce a rate cut on September 18, marking the beginning of what is known as an easing cycle, which has historically supported risk assets, including Bitcoin.

However, traders are divided on the size of the impending rate cut, preparing the market for potential volatility after Wednesday’s interest rate decision. Today, futures on Federal Reserve funds showed a 50% chance of a 25-basis point rate cut to a range of 5% – 5.25%. Meanwhile, markets saw a similar probability for a larger 50-basis point cut to a range of 4.7% – 5%.

In my opinion, Bitcoin’s upward momentum from its recent lows at $52,530 has stalled amid uncertainty regarding the rate cut. The leading cryptocurrency by market cap has dropped from $60,660 to $58,700 recently. I believe that a 50-basis point rate cut may not be favourable for risk assets, given ideas that the Federal Reserve is becoming more concerned about the economy, and it seems like an acknowledgement that rates should have been lowered in July. A 50-basis point rate cut signals a sense of panic, which may affect demand for riskier assets, including cryptocurrencies.

Meanwhile, all PolitiFi tokens linked to Donald Trump saw declines of over 10% in the past 24 hours, with MAGA, TREMP, and STRUMP falling 10%, 10%, and 14%, respectively. This drop followed reports of a second alleged assassination attempt on Trump over the weekend, which weighed on the positive outlook for the cryptocurrency market.

In my view, the impact of Donald Trump’s potential victory on the cryptocurrency market is clear and multifaceted. Despite the recent Bitcoin correction, market sentiment remains sensitive and could be significantly affected by political events. While data and forecasts indicate that Trump’s victory could lead to notable increases in Bitcoin’s price, the current negative sentiment and volatility suggest that investors will remain cautious. With the elections approaching, I expect political influences to continue driving fluctuations in the cryptocurrency market, as investors stay on edge awaiting upcoming developments