BTC Shy of Records Ahead of US Election

Bitcoin (BTCUSD) rose to $70,202 on Monday, 28 October, for the first time since June, as optimism increased around a Donald Trump win in the US presidential election on November 5. 

The gains brought the cryptocurrency just shy of its March record high of $73,797 as investors prepared for Coinbase (COIN) and MicroStrategy (MSTR) corporate earnings reports on Wednesday, 30 October. The two stocks recorded a 5% and 9% gain during Monday trading.

Although analysts expect further upside in the price of BTC, the reaction around the $70,000 round resistance may reveal to markets whether Bitcoin takes a cyclical or monetary path. Bitcoin still changed hands at $71,310 on Tuesday, 29 October.

Convergence of Catalysts Boost Bitcoin

According to Polymarket data, the chances of the Republican nominee, Donald Trump, winning the election have left Kamala Harris behind by 30%. The Polymarket and Kalshi betting platforms see the likelihood of Trump’s victory at 62% and 66%, respectively, as of Monday.

The former president has been pro-crypto this year, starting off with picking crypto-friendly nominee and Bitcoin holder JD Vance as his running mate. Not only did he host a campaign fundraiser event on the sidelines of the Bitcoin Conference in Nashville in July, one of the biggest crypto events in the US, but he also launched his own non-fungible token (NFT) collection on Solana (SOLUSD) just months before in April. Conversely, Harris has called for stringent regulations on digital assets.

Most interesting is the Trump family’s stablecoin project, World Liberty Financial, which was revealed in September, joining the likes of PayPal (PYPL) and Coinbase. Analysts see the controversial move as a win for the crypto industry as it would allow the US, via a Trump presidency, to negotiate with leading stablecoin issuers and “make crypto and America great again by driving the mass adoption of stablecoins and decentralised finance.” 

Aside from the “Trump Trade” effect on BTC prices, the historical seasonality effects of Q4 and the reappearance of a pattern seen before the previous bull run have supported the upside. VanEck’s head of digital assets research, Matthew Sigel, told CNBC on Monday, “This is a very bullish setup for Bitcoin going into the election,” referring to the same pattern of low-volatility vs. high-volume pre and post the 2020 election. 

The move came on the heels of strong Exchange Traded Funds (ETF) inflows and de-escalation in the Middle East during a light calendar Monday, fuelled by positive sentiment around Trump’s Madison Square Garden campaign on Sunday. It followed Elon Musk’s proposal for the Department of Government Efficiency, DOGE, during his appearance at the Trump rally. Meanwhile, data from CoinGlass showed record open interest of $41.7 billion on October 29, suggesting a “post-election surge” when combined with call options.

What Could Be Next for Bitcoin Prices?

With US spot ETF inflows for Bitcoin at $3.3 billion in October, BTC appears to be pricing in a Trump win on 5 November. However, despite already surging over 70% in 2024 and trading near record highs at present, option traders still expect Bitcoin prices to increase to $80,000 regardless of who wins the election. 

If the pattern VanEck’s Sigel referred to repeats itself this year, BTC may be due to a rally byof around 120% just by the end of 2024, mirroring the gains experienced during the same period in the November 2020 election. The fund manager also said VanEck expected Bitcoin prices to eventually reach $2.9 million by 2025, assuming the cryptocurrency finds utility as a reserve asset. 

According to popular crypto analyst, Benjamin Cowen, Bitcoin is facing stiff resistance near the $70,000 handle in the short term and may experience a capitulation event before rising. Cowen said that prices typically rise during the last quarter of a halving year. However, he pointed to monetary policy as a potential factor for a delayed upside reaction to early 2025 instead. He added that potentially rising unemployment rates, which are due on Friday, 1 November 1, may be one of the catalysts that could weigh on BTC prices in the short term.

Conclusion

Bitcoin's surge above the $70,000 handle reflects a confluence of factors, including optimism surrounding a potential Trump presidency and historical and cyclical patterns. As anticipation builds for key earnings reports from Coinbase and MicroStrategy days before the impending US presidential election, analysts foresee potential gains and a continuation of the recent trends past the election date. 

Caution remains high due to macroeconomic factors as the cryptocurrency's trajectory stays intertwined with broader market dynamics, setting the stage for a potentially (delayed) bullish period ahead.