The U.S. 2024 election season has stirred significant interest, particularly with pro-crypto presidential candidate Donald Trump making waves by leading in major polls. This political climate has brought about a nuanced impact on Bitcoin’s (BTC) market performance. Recently, Bitcoin has shown signs of a short-term bearish trend, experiencing a decline of over 4% over the past week. As of Tuesday, November 5, during the early New York trading session, Bitcoin hovered just above a critical support level near $68.5k.
Despite closing October on a positive note, November has commenced with a less optimistic outlook for Bitcoin. Historically, over the past six years, November and December have often seen Bitcoin trending more bearish than bullish, setting a challenging stage for the cryptocurrency as we move deeper into the month.
Understanding Why Bitcoin Investors Are Derisking
Bitcoin’s recent price action has been characterized by a downward trend since it retested its all-time high in late October, surpassing $73k. The diminished demand for Bitcoin, evidenced by the significant cash outflows from U.S. spot BTC ETFs, has contributed to the prevailing bearish sentiment. On Monday, these ETFs witnessed their largest cash outflows since early May, amounting to approximately $541 million. The uncertainties surrounding the U.S. elections are likely to exacerbate crypto volatility in the coming days, making Bitcoin a less attractive investment option for some.
In addition to election-induced volatility, central banks like the Bank of England and the Federal Reserve are anticipated to implement another rate cut on Thursday, aiming to stimulate economic growth. This combination of impactful news has prompted investors to seek stability within the stablecoin market, further influencing Bitcoin’s price trajectory.
Setting Midterm Targets for Bitcoin’s Price
Renowned crypto analyst Ali Martinez has observed that Bitcoin is currently testing a crucial 1-hour falling logarithmic trend that has been developing over recent days. After facing rejection five times during this period, Martinez suggests that Bitcoin’s price could potentially decline further, targeting support levels above $66k.
In contrast, crypto critic Peter Schiff has previously warned investors about a possible “sell-the-news” scenario following the U.S. election. Nonetheless, this bearish outlook could be overturned if Bitcoin manages to secure consistent closings above the $71k mark, thereby invalidating the current negative sentiment.
The ongoing developments in both the political and economic arenas are likely to continue influencing Bitcoin’s price movements, highlighting the intricate interplay between external factors and the cryptocurrency market. Investors are advised to stay informed and exercise caution as they navigate this volatile landscape.
