Are the elections and falling rates affecting BTC?
The upcoming U.S. presidential elections could trigger a change in sentiment in the crypto markets.
The upcoming presidential elections in the U.S. could trigger a shift in sentiment in the crypto markets. Ruslan Lienkha, Chief of Markets at YouHodler, says the following:
The upcoming elections have significant potential to influence the crypto market. A Trump victory could spark short-term optimism, since he is seen as crypto-friendly. This could also have a lasting positive effect on the industry. Conversely, a Democratic administration is expected to maintain its conservative approach to crypto regulation, which could lead to less market movement.
Whether the election result will actually lead to such a binary outcome is questionable. Bitcoin, after all, has managed to hit new highs even under a Democratic administration, and judging by the measures the SEC has imposed on crypto firms.
Fed cuts the key interest rate in the US — how the Bitcoin price could react
The U.S. Federal Reserve cut its benchmark interest rate in one move by 50 basis points on September 18. After years of rising interest rates, the policy shift is now complete.
After a brief sell-off, Bitcoin surged. Gold also hit a fresh all-time high shortly after the rate cut. Looking back, the last rate cuts have always been followed by a rebound in the capital markets. For example:
At the start of the coronavirus pandemic in 2020, the U.S. Federal Reserve expanded the money supply massively and flooded the market with cheap money. If you compare the development to Bitcoin's price, a clear parallel stands out. BTC jumped from just under USD 5,000 on March 15, 2020 to a peak of USD 69,000 in November 2021.
Whether we will see a similar pattern in the near term is unclear. Price movements depend on more factors than just the rate. Other factors include the dollar index and the state of traditional financial markets. Bitcoin price forecasting has historically proven to be nearly impossible. In the coming period we will see which pattern Bitcoin price follows.
