- Bitcoin’s next big move will likely hinge on market sentiment shifts.
- Will Bitcoin’s see-saw year lead to a comeback or a crash?
It’s been a see-saw year for Bitcoin. Every time the price flirts with breaking old highs, it takes a nosedive.
But could a rebound finally be in the cards?
Bitcoin’s unpredictable price swings are “driven mostly by sentiment and less so by fundamentals,”according to GSR analysts.
Market watchers are now honing in on four key factors that could sway Bitcoin’s price.
US elections
Bitcoin’s next big move could hinge on the US presidential election.
Former President Donald Trump, viewed as pro-crypto, has laid out plans to fire Securities and Exchange Commission Chair Gary Gensler and establish a Bitcoin reserve, while Vice President Kamala Harris is relatively more vague on her stance.
There are also growing concerns that November’s election results could be contested.
Adam Guren, chief investment officer at Hunting Hill, told DL News that a contested election could “land us in some recession, or at least a slowdown.”
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“In that version, you’ll have more rate cuts,” which will shore up Bitcoin’s price, sending it along with other risk-on assets higher,” Guran added.
With election day nearing, poll results and campaign promises are expected to weigh on sentiment, particularly for assets like Bitcoin.
Monetary policy
Central banks could act as a tailwind for Bitcoin if they ease monetary policies, but more aggressive tightening could be a drag on markets.
Historically, increased global liquidity boosts risk assets like Bitcoin. GSR analysts say the US Federal Reserve and the Bank of Japan are the ones to watch.
The Fed is expected to cut rates again in November, which could boost the price of Bitcoin if paired with solid economic data.
Don’t expect the Fed to make an aggressive tax cut akin to the one in September — the CME Group’s FedWatch tool put the odds of a 0.25% rate cut at just over 80%.
Japan has started to shift away from its long-standing negative interest rates, with the BoJ hinting at gradual rate hikes to stabilise the yen.
If Japan continues down this path, it could trigger wide swings in crypto prices.
US economy
The US economy remains a major factor for Bitcoin’s near-term outlook, with mixed signals keeping investors on edge.
Although recent data shows signs of stability, like steady job growth and positive commentary from the Fed, there are also worrying indicators, such as the recent drop in consumer confidence.
GSR analysts note that while “incoming data bears watching,” the US is headed for a soft landing, which they regard as a positive catalyst for crypto.
On the other hand, any signs of recession fears could send Bitcoin even lower as investors shift toward safer assets.
Silk Road sale
Another factor that could weigh on Bitcoin is the US government’s potential sale of nearly 69,000 Bitcoin — worth some $4.2 billion — seized from the Silk Road marketplace.
The Supreme Court’s recent decision to decline hearing an appeal paves the way for a false. GSR’s Brian Rudick warns that investors should not ignore the potential impact.
“This could cause a decent downward draft on the markets,” Rudick told DL News.
The government’s sale of such a large amount could mirror the market turbulence seen with Mt. Gox disbursements earlier this year, which sent Bitcoin tumbling nearly 20%.
If the sale happens, it may lead to increased volatility, depending on the method and timing of the liquidation.
Crypto market movers
- Bitcoin is even on the day, trading at $61,050.
- Ethereum is up 0.6% to $2,411.
What we’re reading
Kyle Baird is DL News’ Weekend Editor. Got a tip? Email at kbaird@dlnews.com.