As the U.S. presidential election looms, Bitcoin’s price has shown considerable fluctuations, raising debates on the potential market impact from election results. This week, cryptocurrency markets have been on high alert as traders anticipate volatility influenced by both election outcomes and other macroeconomic factors, like the upcoming Federal Reserve interest rate decision.
Anticipating Election-Driven Volatility
With the election only days away, market predictions suggest a strong chance of Bitcoin experiencing at least a 10% move in either direction, depending on who wins the presidency. As the contest between Republican candidate Donald Trump and Democratic candidate Kamala Harris intensifies, BTC volatility recently spiked to its highest point in three months, a trend analysts expect to continue post-election.
Greg Magadini, derivatives director at Amberdata, noted the unusual options activity on Deribit, where Bitcoin options indicate an annual volatility rate of 112% with a potential $4,000 movement. “The market is preparing for the impact of this election,” he noted, adding that Bitcoin could see movement within a +1.5-sigma range, with price reactions between $6,000 to $8,000 depending on the winner.
The Bear Case for Bitcoin: Analyst Suggests Potential Dip to $28,000
Speculations on a possible Bitcoin downturn have gained traction, especially following crypto analyst Bob Loukas’ recent analysis. Loukas suggests that Bitcoin’s performance aligns with a broader 16-year cycle, placing BTC in a distribution phase that may signal a potential bearish correction. Loukas foresees Bitcoin possibly dropping as low as $28,500 by 2026 before rebounding toward a projected high of $59,500 by 2027. While Loukas emphasizes that this bear scenario has only a 10%–15% chance, it brings awareness to Bitcoin’s cyclical nature and the role of macro trends in influencing price.
Traders Remain Bullish Despite Short-Term Pullback
Not all market experts see the recent downturn as cause for alarm. Doctor Profit, a seasoned crypto trader, views the current correction as a “healthy and reasonable” phase that may allow for a consolidation before Bitcoin’s next upward move. The analyst noted, “Given the enormous gain seen over the past two weeks, this drop is reasonable and a healthy correction.”
The modest price decline was driven in part by speculation that Kamala Harris might win the election, a scenario Doctor Profit believes would be less favorable for crypto. Conversely, a Trump victory could fuel bullish momentum, as Trump has promised a crypto-friendly regulatory environment.
Bitcoin Supply Constraints: Demand Outpaces OTC Desk Availability
Amid market speculation, data from CryptoQuant reveals an emerging supply squeeze in the Bitcoin market, particularly among over-the-counter (OTC) desks that facilitate large-scale transactions for institutional buyers. According to Doctor Profit, OTC desk balances have decreased significantly, with available BTC now estimated between 110,000 to 130,000, down from over 400,000 earlier this year.
Several market watchers speculate that CryptoQuant may be inflating these figures, with reports from X (formerly Twitter) suggesting that real OTC BTC supply could be lower, intensifying demand on exchanges and potentially driving up Bitcoin’s price.
Key Market Events: The Fed’s Rate Decision Could Add to BTC Volatility
In addition to the election, Bitcoin traders will be closely watching the Federal Open Market Committee (FOMC) rate decision on November 7. Market predictions currently favor a 0.25% rate cut, an action widely seen as bullish for risk assets like Bitcoin. The combination of election results and rate decisions could bring sharp price swings in the coming days, with the U.S. Dollar Index (DXY) likely responding to the Fed’s stance on monetary policy.
Is the Bitcoin Bull Market Truly Over?
Although Bitcoin’s recent dip has stirred speculation about an impending bear market, experts remain cautiously optimistic. Even Loukas, who suggested a potential dip to $28,500, noted that a bear cycle remains uncertain. As election day and macro events unfold, the path forward for Bitcoin will likely reveal the strength and resilience of the current market sentiment.
With a steadily decreasing OTC Bitcoin supply, potential volatility from election results, and the impact of macroeconomic policies, the coming days could be pivotal in defining Bitcoin’s trajectory heading into 2025.
Disclaimer: This article is intended for informational purposes only and should not be construed as legal, tax, investment, financial, or any other form of advice.