The much-anticipated 2024 US presidential election has concluded with Donald Trump securing a second term, triumphing over Kamala Harris. This political shift has coincided with a significant milestone in the world of cryptocurrency, as the price of Bitcoin soared to a new all-time high of $75,407 on Binance during the election night.
The Impact of Trump’s Promises on Bitcoin
The surge in Bitcoin’s value is largely attributed to the optimistic response to Trump’s election promises. He has pledged to incorporate Bitcoin into the national strategic stockpile, dismiss SEC Chairman Gary Gensler, and implement a crypto-friendly policy framework. While experts suggested that a Harris victory might have led to a short-term dip in Bitcoin’s price, Trump’s triumph has fueled bullish predictions across the board.
Henrik Zeberg’s Cautionary Analysis
Despite the optimistic outlook, economist Henrik Zeberg presents a more cautious perspective. Zeberg warns that Trump’s proposed economic strategies could trigger a recession in the US, culminating in a “blow-off top” scenario for Bitcoin and the wider cryptocurrency market. A central element of his argument is Trump’s plan to replace certain taxes with tariffs to boost domestic economic growth.
Is a Bitcoin Blow-Off Top Scenario Looming?
Drawing parallels with historical economic events, Zeberg suggests that Trump’s tariff strategy may mirror the economic errors of the 1920s and 1930s. In a post on X, he referenced the Smoot-Hawley Tariff Act of 1930, arguing that “everything is lined up for history to repeat itself.” The act, by significantly increasing US tariffs on imports, spurred retaliatory measures from other countries, leading to a sharp decline in international trade and exacerbating the Great Depression.
The Smoot-Hawley Tariff Act and Its Implications
This protectionist approach triggered a severe contraction in global trade, worsening economic decline, and extending global hardship. Despite these concerns, Zeberg predicts a notable, albeit temporary, spike in Bitcoin’s price, setting a target of 115-123K, based on his analysis using Fibonacci extension levels—a technical tool used to forecast future price movements based on historical data.
Key Fibonacci Levels to Watch
According to Zeberg’s analysis, one critical level to observe is the 1.618 Fibonacci extension, calculated at $114,916.16, which he suggests is “very likely the top.” This implies that Bitcoin might reach this price before a significant reversal occurs. Additionally, several other key Fibonacci levels may act as resistance points during Bitcoin’s ascent:
- The 0.382 level at $77,437.88 represents a notable initial resistance following the breakout from the previous all-time high.
- The 0.618 level at $85,205.47 could serve as minor resistance as the price increases.
- The 1.0 level at $107,435.71 is both a psychological and technical threshold.
- The 1.27 level at $123,148.19 suggests a potential overshoot beyond the primary target area.
Rapid Price Increase Predictions
An annotation on Zeberg’s chart poses the question, “58% in less than 3 months into the top?” indicating his expectation of a swift price rise within a relatively short timeframe, consistent with past patterns. As of the latest data, Bitcoin is trading at $73,742.
In conclusion, while Trump’s victory has instilled optimism in the crypto markets, particularly for Bitcoin, it is essential to remain mindful of the potential economic repercussions of his proposed policies. The coming months will be crucial in determining whether this optimism will translate into sustained growth or if the market will face a blow-off top scenario.
