(Kitco News) – Monday saw stock prices bounce back from the weakness seen at the end of last week, led by a strong showing from tech as investors assessed the financial landscape following President Joe Biden’s exit from the presidential race over the weekend.
“On Sunday, Biden ended his reelection campaign and endorsed Vice President Kamala Harris as the Democratic Party’s nominee,” noted analysts at Secure Digital Markets. “Harris’ new campaign raised $49.6 million in grassroots donations within a day of its launch.”
“The Democrats, previously headed for a ‘landslide defeat’ in November, now have a fighting chance,” they added. “Harris’ nomination also reduces the odds of Republicans winning both houses of Congress, dropping Trump’s odds from 71% on Sunday to 65% on Monday on Polymarket, while Harris' odds rose from 16% to 30%.”
They said Trump's upcoming Nashville Bitcoin conference speech now has added significance as he continues to make his case for being the pro-crypto choice for president. “Speculation is high that he may announce a larger role for crypto in the financial system,” Secure Digital Markets analysts said. “If Trump declares BTC a strategic reserve asset, it could trigger a parabolic price increase. The potential for a crypto-friendly government is boosting sentiment among professional traders.”
Looking at Monday’s price action, they noted that “Bitcoin (BTC) briefly touched $68,500 before retreating to $66,000, with open interest holding steady over the weekend. Bullish sentiment has risen among traders, driven by a positive outlook on the U.S. election.”
BTC/USD Chart by TradingView
The afternoon saw a revival in bullish momentum, and at the time of writing, Bitcoin trades at $68,115, an increase of 0.55% on the 24-hour chart. Spot gold is flat on the day and trades at $2,400.
As for stocks, the S&P, Dow, and Nasdaq all finished the day in the green, up 1.08%, 0.32%, and 1.58%, respectively. Market watchers are now focused on a busy week of data, with reports on second-quarter GDP due Thursday and the Federal Reserve's preferred inflation metric, the Personal Consumption Expenditures (PCE) index, due Friday.
Bounceback only temporary?
The crypto market has seen a significant turnaround in prices following Bitcoin’s plunge to $53,500 on July 5, buoyed by developments on the political front, including the attempted assassination of Donald Trump and Kamala Harris’ ascent to the top of the Democratic party ticket.
While crypto fans insist the turnaround is just the start of the next leg up in the bull market, a research report from analysts at JPMorgan said the rebound is likely to be tactical in nature and not the beginning of a new long-term bullish uptrend.
JPMorgan analysts, led by Nikolaos Panigirtzoglou, said this was because the price of Bitcoin is currently too high versus its production cost of $43,000, and relative to its volatility-adjusted comparison to gold, which is $53,000.
They also cited a waning momentum in the Bitcoin futures market amid large liquidations by creditors of Gemini, Mt. Gox creditors, and the German government. But with the German government now out of Bitcoin and the threat of a Mt. Gox sell-off subsiding as creditors have thus far limited their sales, the bank expects liquidations to subside this month and anticipates a rebound in Chicago Mercantile Exchange (CME) Bitcoin futures positioning into August.
The analysts also think that both Bitcoin and gold will benefit from the higher likelihood of a Trump election win, saying a “second Trump presidency is seen by some investors as more friendly towards crypto companies and towards crypto regulations, in contrast to the current Biden administration.”
This view was shared by Markus Thielen, founder of 10x Research, who also pointed to another potential pro-crypto development that a new administration would bring: a new chair at the Securities and Exchange Commission (SEC).
“With Joe Biden dropping out of the US Presidential race, no credible candidate can seriously challenge Donald Trump,” Thielen said. “The November election appears to have been decided without a single vote. For Bitcoin, a pro-crypto administration will enter the White House. Historically, this meant that the SEC chair resigned when a new administration was elected, despite SEC Chair Gensler’s term ending on June 5, 2026. He will most likely resign by January/February 2025.”
Also boosting sentiment are the persistent rumors that Trump could label Bitcoin as a strategic reserve asset at the Nashville Bitcoin conference later this week.
“[F]ormer President Trump is set to deliver a highly anticipated speech in Nashville,” Thielen said. “Speculation is high that he will announce Bitcoin as a strategic reserve asset, which could trigger a parabolic rise in Bitcoin's price.”
Because of this, he warned traders about selling Bitcoin or opening a short position ahead of the speech. “Taking profit, or even shorting bitcoin ahead of Trump’s Nashville speech, could turn out to be an expensive exercise,” Thielen wrote.
He added that Bitcoin’s previous bull market all-time-high of $68,300 could be “defined as a line in the sand” that BTC could surpass following an expected “parabolic move” in the coming months as long as it successfully holds above that level.
According to market analyst Rekt Capital, Bitcoin is now 66.6% through the “Re-Accumulation phase” of its halving cycle, after which comes the “Parabolic Phase.”
#BTC Re-Accumulation Phase Progress:
▓▓▓▓▓▓░░░░ 66.6%
The Re-Accumulation phase precedes the Parabolic Phase in the cycle (green)$BTC #Crypto #Bitcoin pic.twitter.com/m9Ldbo3ibU— Rekt Capital (@rektcapital) July 22, 2024
Altcoins in the red
Altcoins struggled to gain momentum on Monday, resulting in most tokens in the top 200 recording minor losses.
Daily cryptocurrency market performance. Source: Coin360
AIOZ network (AIOZ) bucked the trend to post a gain of 17.4%, followed by a 15.7% gain for cat in a dogs world (MEW), and an increase of 14% for Celestia (TIA). Raydium (RAY) was the biggest loser, falling 9.8%, while OriginTrail (TRAC) lost 8.8%, and io.net (IO) fell 7%.
The overall cryptocurrency market cap now stands at $2.47 trillion, and Bitcoin’s dominance rate is 54.5%.
