The U.S. 2024 elections have generated substantial attention, particularly with pro-crypto presidential candidate Donald Trump gaining traction in major polls. This political climate is playing a significant role in shaping the cryptocurrency market’s trajectory, with Bitcoin (BTC) experiencing short-term bearish trends. Over the past week, Bitcoin’s value has declined by over 4%, positioning itself above the crucial support threshold of approximately $68.5k. This market activity was observed during the early trading session in New York on Tuesday, November 5.
Bitcoin’s Bearish Start to November
Despite closing October with positive momentum, Bitcoin has entered November with a downturn. Historical data over the past six years indicate that Bitcoin tends to show more bearish patterns in November and December compared to other months. This shift in sentiment is crucial for investors considering the timing of their market entry and exit strategies.
Why Bitcoin Investors Are Derisking
Bitcoin’s price faced resistance after retesting its all-time high at the end of October, exceeding $73k. This resistance has trapped the coin in a downward trend, significantly influenced by decreased demand. Evidence of this can be seen in the cash outflows from U.S. spot Bitcoin ETFs, which indicate a cooling enthusiasm for the digital currency. On Monday, these ETFs experienced the most substantial cash outflows since early May, amounting to approximately $541 million. The political uncertainties surrounding the U.S. elections are expected to further amplify crypto market volatility, making it less appealing to cautious investors.
In response to these dynamics, the Bank of England and the Federal Reserve are anticipated to implement another rate cut on Thursday to boost economic growth. This high-impact news has led many investors to seek stability in the stablecoins market, reflecting a broader trend of risk aversion.
Midterm Targets for BTC Price
Renowned crypto analyst Ali Martinez has highlighted that Bitcoin is currently testing a significant 1-hour falling logarithmic trend that has emerged recently. After facing rejection five times, Martinez predicts that Bitcoin’s price may continue to decline in the coming days, approaching the support level above $66k.
On the other hand, prominent crypto critic Peter Schiff has warned investors about a potential “sell-the-news” scenario following the U.S. election. Nevertheless, if Bitcoin consistently closes above $71k, the bearish outlook could be invalidated, presenting a more optimistic scenario for investors.
As the market navigates these volatile conditions, understanding the interplay between political events and crypto market dynamics is essential for informed investment decisions. The upcoming weeks will be critical for Bitcoin investors, as they assess whether to hold, diversify, or seek refuge in more stable assets.
