(Kitco News) – Gold extended its non-stop rally higher on Tuesday while stocks and Bitcoin (BTC) traded sideways as the bond market sell-off continued to ripple through financial markets. The rapidly approaching elections in the U.S. also influenced market sentiment, as the rising odds of a Trump victory have analysts rushing to predict what his economic policies could mean for asset prices.
“Bianco Research highlights a correlation between the rise in the 10-year yield and the improving odds of Donald Trump clinching an election victory,” noted analysts at Secure Digital Markets. “Trump's commitment to imposing tariffs could exacerbate domestic inflation, complicating the Fed's ability to slash rates. This scenario is nudging U.S. Treasury yields higher, which in turn diminishes the attractiveness of more volatile assets.”
With the S&P trending flat, the analysts noted that a “potential consecutive loss for the S&P 500 would mark its first since early September.”
“The recent spike in interest rates has cast a shadow over the otherwise solid earnings season,’ they added. “With the 10-year Treasury yield breaching 4.20%, market sentiment is tilting towards skepticism regarding the Fed's future rate cuts. Minneapolis Fed President Neel Kashkari's remarks on Monday suggest a more cautious approach by the central bank moving forward.”
Trump’s rising odds of victory are also impacting cryptos as he is widely seen as the candidate who will benefit Bitcoin most if elected.
“Trump's odds of winning the presidential election appear to have shown a strong correlation with Bitcoin's price appreciation, suggesting that much of the recent price increase may be driven by speculation surrounding his potential victory,” said analysts at Bitfinex. “The market reactions observed over the past few months reinforce this sentiment, highlighting a distinct bias in investor behavior.”
“Equities, in contrast, have displayed uncertain flows amid a closely contested race between Republican and Democrat candidates, while the cryptocurrency market, particularly Bitcoin, has maintained a notable correlation with the likelihood of a Republican win,” they added. “This connection has intensified since Donald Trump has made public statements regarding potential reforms within the SEC and the broader outlook for the crypto market, including taxation policies that would impact crypto participants.”
“While we can anticipate pullbacks and volatility in the lead-up to or shortly after the elections, we believe that the current nature of the open interest in the market does not signal a cause for concern on higher time frames,” they concluded. “Instead, Bitcoin appears to be following a trajectory similar to that observed in October 2023, which could ultimately pave the way for price appreciation on higher time frames.”
For now, Bitcoin bulls continue to be stymied by the resistance between $68,000 and $70,000, which has blocked multiple attempts to rally higher going back to March.
BTC/USD Chart by TradingView
Following the attempt to push higher on Monday, Bitcoin retraced to $66,500, triggering “around $200 million in liquidations in the futures market, underscoring the heightened leverage that had been building up,” noted Secure Digital Markets analysts. “Given the recent uptick in leverage, which typically foreshadows volatility, we're eyeing a potential dip towards $63,000 as an optimal entry point for traders.”
“In the realm of crypto ETFs, Bitcoin ETFs continue to draw significant capital, with inflows totaling $294.3 million, predominantly spearheaded by Blackrock's robust inflows of $329 million,” they added. “Conversely, Ethereum (ETH) ETFs have experienced outflows of $20.8 million, applying downward pressure on the broader market.”
At the time of writing, Bitcoin trades at $67,506, a decrease of 0.30% on the 24-hour chart.
A late attempt by stock market bulls to pull the major indices out of the red failed for the S&P and Dow as they finished flat (although, technically, in the red with final readings of negative 0.05% and 0.02%, respectively), while the Nasdaq finished up 0.18%.
Gold notched another record high above $2,748/oz during intraday trading and, at the time of writing, trades at $2,747.60/oz for an increase of 1.06% on the session.
$100k Bitcoin seen as inevitable
While Bitcoin bulls are dealing with stubborn resistance below $70,000, analysts across the crypto ecosystem see the struggles as temporary, and it's only a matter of time before BTC hits a new all-time high on its way to $100,000.
“It’s feeling like a breakout to a fresh record high in the price of Bitcoin is inevitable and inching closer,” said Joel Kruger, market strategist at LMAX Group, in a note to Kitco Crypto. “The market has been very well bid in recent days, consistent with seasonal trend analysis that had been forecasting a strong October performance.”
“The next big obstacle is a barrier at $70,000, which coincides with the July 2024 high and guards against the record high from March at $73,835,” he added. “There has been some chatter that up until this point, optionality and strikes have been working to keep the market capped. But it looks like pressure has been mounting for a breach of the $70k resistance, and as per our technical insights, this could set the stage for a push through the record high.”
“If we consider the Bitcoin consolidation over the past several months, it’s been a consolidation of roughly $25,000 between $50k and $75k,” Kruger noted. “Given that markets like to move in measured moves, a breakout to a fresh record high would then imply the next measured move upside extension of $25,000, targeting a test of the major psychological barrier at $100k.”
“Fundamentally, ETF inflows have picked back up in a big way in recent days, highlighting super impressive total net flows, which translate to an extremely successful launch of bitcoin and ETH ETFs in 2024,” he said. “The appetite for the ETFs clearly reflects a traditional market that is very interested in taking on exposure to the emerging asset class.”
“Meanwhile, politics have also factored into the recent price appreciation,” Kruger added. “The market believes Trump to be the decidedly more crypto-friendly candidate. Trump has been gaining in the polls and is well out in front on the predictive markets platform Polymarket.”
According to a recent survey conducted by ReviewExchanges, “2 out of 3 respondents believe that a victory for Donald Trump could ignite a bullish trend in crypto prices.”
“Furthermore, a Trump victory is seen as positive for the crypto market for several reasons,” the report said. “38.5% of respondents believe his pro-crypto stance would create a more favorable environment for crypto growth. 26.7% think his push for lower taxes would benefit crypto investors and businesses alike.”
“Another 17.9% feel his policies would support private sector innovation, giving crypto and blockchain companies room to expand. Additionally, 12.3% of participants said Trump is less likely to impose strict regulations on crypto, which could keep the market free and flexible,” the report added. “Finally, 4.6% pointed out that his focus on strengthening the U.S. economy and global trade could indirectly boost confidence in cryptocurrencies.”
That said, many respondents have also elected to sit on the sidelines until the election-inspired volatility quiets down, as there are no certainties in life or politics, and any issues or delays in declaring a winner could lead to even more volatility.
“55.93% of survey participants reported taking a more cautious approach to their crypto investments when election news fills the headlines,” the report said. “Many of these respondents choose to either reduce their investments or hold off on adding new ones until the political climate stabilizes. Meanwhile, 19.85% prefer to maintain their current positions without making any new investments.”
“In contrast, 14.28% see election periods as a favorable time to buy, particularly if prices drop,” the report added. “On the other hand, 6.87% of participants completely avoid the crypto market during elections, and 3.07% indicated that election events have no impact on their investment decisions.”
Regarding the eventual winner, “71.6% of survey participants think that if a pro-crypto candidate wins, it will lead to more people adopting and using cryptocurrencies in the U.S,” the report said. “They believe that a pro-crypto leader could create policies that support blockchain technology and encourage its growth.”
“12.5% believe that while adoption may increase, it will only happen slowly, as factors like regulation and public trust play a bigger role,” the report added. “Another 8.3% said a candidate’s stance won’t have much of an impact on adoption, while 4.2% expect adoption to continue at its current pace regardless of who wins. 3.4% were undecided on the issue.”
As for Bitcoin’s price in the lead-up to the election, John Glover, Chief Investment Officer at Ledn, noted that “we finally broke above the trend channel that I’ve been focused on (blue line), only to run into resistance from what I consider to be a weaker flag pattern (dotted red line) that is constructed from the daily closing prices as opposed to highs & lows.”
“Support now resides at the $65k level, and I’m confident that in the coming days leading up to the election that BTC price will test the previous high at $73k and on its way to compete wave (5) (yellow line) of Wave III (orange line),” he added. “Watch for election headlines to cause impulsive moves in either direction as the market has adopted a ‘Trump good, Harris bad’ view on BTC prices.”
Altcoins slide on broad market weakness
Altcoins struggled to gain momentum alongside Bitcoin, with most tokens in the top 200 recording losses on Tuesday.
Daily cryptocurrency market performance. Source: Coin360
The top gainer was Popcat (POPCAT), which increased by 9.8%, while Ponke (PONKE) climbed by 9.4%, and Uniswap (UNI) gained 4.7%. ApeCoin (APE) suffered the biggest loss, falling 17.4%, followed by a decline of 13.3% for Scroll (SCR) and a loss of 10% for dYdX (DYDX).
The overall cryptocurrency market cap now stands at $2.33 trillion, and Bitcoin’s dominance rate is 57.3%.
