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The US presidential election is approaching and the election result odds have narrowed on prediction platforms such as Polymarket. This uncertainty is increasing volatility in the Bitcoin and crypto markets, while China and the Fed’s financial policies are predicted to create a “perfect storm” in the Bitcoin price in the last quarter of the year.
Bitcoin price is trading just below its all-time high of $70,000. Tesla CEO Elon Musk’s suggestions for Bitcoin as a possible “financial emergency” have triggered huge speculation in the markets. At the same time, BlackRock CEO’s warnings to the Fed have led investors to brace for volatility that could be triggered by the US central bank and China’s influence.
According to Bitfinex analysts, “Election uncertainty, the ‘Trump trade’ narrative and the positive fourth-quarter seasonal effect are creating a perfect storm for Bitcoin.” The fourth quarter has historically been an uptrend, with the median quarterly return in halving years being 31.34%. This positive seasonal effect, combined with record open interest volume in Bitcoin options and futures, is boosting optimism among market participants towards the end of the year.
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Trump’s Embrace of Bitcoin Supports Prices
Donald Trump’s promise to support Bitcoin and crypto in the 2024 elections is having a positive impact on Bitcoin prices. Trump predicts that if he is re-elected, he will create a “Bitcoin strategic reserve” for the US, which will push Bitcoin’s price past gold. Plans such as paying off a portion of the US’s $35 trillion debt with Bitcoin and ensuring that all Bitcoin mining is done in the US indicate his goal of making the US the “crypto capital of the world.”
Policy Steps by the Fed and China May Affect the Bitcoin Price
The Fed is expected to implement another interest rate cut this week. “In the long run, lowering interest rates will stimulate the credit market and provide more liquidity, and Bitcoin will benefit from this,” said Agne Linge, WeFi’s head of growth, noting that most analysts support a 0.25% cut. This liquidity will dilute the value of the US dollar, reducing its purchasing power.
On the other hand, China is also expected to accelerate its stimulus program this week. Famous Bitcoin investors believe that such measures could trigger a new Bitcoin bull run.
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