Bitcoin Forecast: Higher levels of $74,500

6 Kasım 2024

Bitcoin Forecast: Higher Levels of $74,500 due to Trump’s Progress in the First Round of the U.S. Elections

Written by: Rania Gule, Senior Market Analyst at XS.com

Bitcoin continues to shine brightly, driven by increasing market support, as it surpassed its previous all-time high of $73,777, boosted by positive sentiment from Donald Trump’s progress in the first round of the U.S. presidential elections. This advancement adds positive momentum to the bullish trend, as investors look to capitalize on political uncertainty as an opportunity to strengthen their cryptocurrency holdings. With the market leaning toward higher-risk assets, the chances of continued demand for Bitcoin rise, pushing prices toward new record levels.

These consecutive price gains for Bitcoin came after a decline caused by large outflows from Bitcoin exchange-traded funds (ETFs). These movements occur at a sensitive time, with the U.S. presidential race seeing a shift, as former president Donald Trump gains ground over his competitor Kamala Harris. The developments in the U.S. election could significantly impact the cryptocurrency markets, especially as attention shifts toward Bitcoin’s role in future economic policies.

Since Trump’s progress was announced hours ago, financial markets, including Bitcoin, have experienced notable movements. It’s no secret that Trump has previously shown strong support for cryptocurrencies, leading some to expect that his victory could provide a significant boost for Bitcoin. A potential second Trump presidency might create a more crypto-friendly regulatory environment, which could contribute to a long-term increase in Bitcoin’s value. This coincides with speculation that Bitcoin could benefit from economic policies Trump may adopt, such as reducing regulatory constraints on cryptocurrencies or improving tax environments.

On the other hand, recent data showed Bitcoin ETF outflows exceeding $540 million in a single day at the beginning of the week, signalling, in my view, a sense of volatility and uncertainty in the market. This drop could be an indication of investors’ concerns about political changes that might negatively impact U.S. economic policies, especially if Harris manages to regain the lead in the race. The outlook remains that market volatility will likely increase in the coming hours, and I believe cryptocurrencies, including Bitcoin, will remain subject to political and economic shifts in the short- and medium-term.

The shifts we are witnessing may be part of what I call the “Trump Trade,” a term used to describe market movements aligned with economic and political trends that Trump may implement. These movements typically include a rise in the U.S. dollar, along with increases in asset prices such as government bonds and gold, reflecting expectations of rising fiscal deficits and inflation. In this context, Bitcoin is one of the assets that might perform well due to its ability to preserve value in uncertain economic environments.

What’s also noteworthy is the potential shift in cryptocurrency policy if either candidate wins the election. Changes in Senate control could have a significant impact on cryptocurrency-related legislation. This may shape policies directly affecting the cryptocurrency sector, such as the confirmation of presidential appointments to regulatory bodies like the U.S. Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). These appointments will be crucial in determining the future legal frameworks for cryptocurrencies in the U.S.

Given these factors, I expect Bitcoin to continue fluctuating within wide ranges until the election winner becomes clear. If Trump wins, Bitcoin’s rise could accelerate due to a more relaxed regulatory environment. Conversely, if Harris wins, we may see a return of uncertainty and volatility in the market, with potentially more stringent policies that could negatively impact Bitcoin’s short-term price. Ultimately, these elections could significantly influence Bitcoin’s movement shortly, with outcomes open to varying possibilities.

It’s clear to me that Bitcoin remains closely tied to political and economic developments in the U.S. Whether under Trump or Harris, the cryptocurrency market will continue to react to changes in economic policies, leaving room for large price fluctuations. Since Bitcoin is an asset that responds quickly to economic and financial conditions, I believe its future price movement will depend on expected changes in the U.S. political landscape, presenting either an opportunity for investors or a threat if volatility persists.

 

Zaid Barem / YMM