As a seasoned crypto investor with a decade of experience under my belt, I can confidently say that this week is shaping up to be a rollercoaster ride for the market. The looming US election and the Fed Rate cut expectations have kept me on the edge of my seat.
This upcoming week is shaping up to be significant in both political and economic spheres, with the U.S. election results on tap and anticipation building about potential Fed interest rate cuts. The contest between Donald Trump and Kamala Harris has tightened again, causing crypto traders to exercise caution as they wait for the final vote tally. Meanwhile, Bitcoin (BTC) remains below $70,000, and altcoins have experienced increased selling pressure over the weekend. Consequently, the overall cryptocurrency market braces itself for potential volatility and liquidity issues this week.
Crypto Traders Brace for FOMC and US Election Volatility
The price of Bitcoin (BTC) ended October below the significant barrier of $70,000, having missed reaching a new record high in the previous week. Meanwhile, other cryptocurrencies also experienced heavy selling due to traders being cautious about the Federal Open Market Committee meeting and the outcomes of the U.S. elections.
This coming Thursday, November 7th, the Federal Reserve is set to reveal their newest decision regarding interest rates. Based on data from CME, there’s a nearly certain chance, approximately 99.7%, that the rate will be reduced by 0.25%. Concurrently, voting for the US Election commences on November 5th, with anticipated results coming in around November 6th. This political event may influence broader financial and cryptocurrency markets.
Key Events This Week:
1. U.S. Presidential Election – Tuesday
2. ISM Non-Manufacturing PMI data – Tuesday
3. Initial Jobless Claims data – Thursday
4. Fed Interest Rate Decision – Thursday
5. MI Consumer Sentiment data – Friday
6. ~15% of S&P 500 companies report earnings…
— The Kobeissi Letter (@KobeissiLetter) November 3, 2024
Lately, the cryptocurrency market has been heavily influenced by U.S. political shifts and broader economic trends. As a result, its future direction might closely mirror that of the S&P 500.
The Kobeissi Letter indicates that, based on historical trends, if the party currently in power – in this case, the Democrats – seems likely to lose, the S&P 500 often sees weaker gains before the election. Recently, however, the S&P 500 has seen a significant surge of about 40% over the past year, which is one of its strongest rallies ever. This could suggest that the market’s inclination may favor a Republican victory.
In addition to their observations, they pointed out that when the current party in power loses an election, market turbulence tends to increase, not just after, but also before the event. Throughout 2024, this volatility index (VIX) has remained high, increasing by 65% year-to-date, despite stock markets reaching new peaks. Consequently, crypto traders and the broader cryptocurrency market may encounter similar levels of volatility in the lead-up to the US elections.
Additionally, the newsletter also stated:
It’s important to mention that no matter if a Republican or Democrat takes office, historically, the market tends to show a GAIN in election years. Over the past century, starting from 1928, the S&P 500 has yielded an average return of approximately +11.3% during such years. In fact, around 83% of these election years have resulted in positive market performance.
Is Bitcoin (BTC) Preparing For A Parabolic Rally?
This week, anticipation is growing for increased market turbulence due to the upcoming FOMC meeting and U.S. election. Nevertheless, experts are optimistic that this upward trend might sustain its momentum over the long term.
Historically, there have been periods after elections when Bitcoin (BTC) has experienced notable bull runs. Currently, Bitcoin seems to be preparing for another upward surge in its price trend. If the current trajectory continues, Bitcoin might reach $100,000 by the end of the year. If it follows a pattern similar to the last two cycles, we could witness an even more dramatic rise, potentially reaching $200,000 and beyond.
Experiencing life as a Bull has shown me that history often tends to recur. For instance, #Bitcoin experiences a dip before elections, yet the events following are usually quite interesting…
— Scottie Pippen (@ScottiePippen) November 3, 2024
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2024-11-04 08:38