As a seasoned researcher with over a decade of experience in the financial markets, I have witnessed numerous ups and downs, bull runs, and bear markets. The recent 6.7% drop in Bitcoin (BTC) has been no exception, but upon closer examination, it appears that the market is not panicking, despite the uncertainty surrounding the US elections.
Over a five-day period from October 31st to November 4th, Bitcoin (BTC) dropped by approximately 6.7%, dipping below the $67,500 level for the first time in eight days. This decrease resulted in more than $190 million worth of highly leveraged long positions being liquidated. Additionally, this downward trend occurred amidst uncertainty surrounding the November 5th US presidential elections.
In contrast to the temporary downward trend in Bitcoin, three key factors related to derivatives suggest that the market isn’t experiencing widespread panic. These favorable signs are reflected in the balance between long and short positions held by top traders on exchanges, the overall amount of open futures contracts for Bitcoin, and the demand for stablecoins in China.
Whales (significant investors) and market makers on Binance and OKX exhibit a high level of faith in Bitcoin’s price rebound, as indicated by their combined spot and futures holdings. Remarkably, this confidence has remained resilient even after the recent dip below $67,500 on Nov. 4.
Cryptocurrency traders maintain positive expectations regarding Bitcoin’s value, yet they are cautious about investing more than $70,000 due to speculations. Some experts predict that if Kamala Harris and the Democratic Party win, increased regulatory oversight might ensue, potentially limiting the involvement of cryptocurrencies within traditional finance systems.
US elections introduce uncertainty and limit the short-term upside
Anonymously trading cryptocurrencies, Crypto Rand posits that Kamala Harris’s vague stance on digital currencies “sows seeds of doubt” and further remarks, “Doubt can be more detrimental than open opposition.” While it’s possible that Harris’s eventual policies could be favorable to the industry, they may not meet the expectations set by Republican candidate and former President Donald Trump.
If elected, Trump suggests he might replace SEC Chair Gary Gensler immediately. However, it’s uncertain how he intends to promote Bitcoin usage. There’s also uncertainty about how swiftly changes in government agencies and the U.S. Treasury could take place. As a result, investors find little incentive to drive Bitcoin’s price to a fresh record high, regardless of the outcome of the U.S. election.
The main cause behind differences in expectations regarding the U.S. presidential elections, particularly as they relate to digital assets, is centered around central bank digital currencies (CBDCs) and other tokenized assets. These digital assets are unique and only distantly related to Bitcoin. Employing blockchain technology for representing real-world assets in a digital format does not significantly affect the overall demand for Bitcoin.
To understand if experienced investors are lessening their involvement with Bitcoin, it’s crucial to examine the overall Bitcoin futures holdings. A significant drop in these holdings might indicate unease about the investment sector, regardless of whether market sentiment is optimistic or pessimistic.
The current BTC open interest of 582,000 is comparable to the prior week’s and stands 10% above its level on Oct. 4. This suggests that investors have been increasing leveraged positions despite recent uncertainty and the price pullback. Combined with top traders’ long-to-short data, this indicates a moderate bullish sentiment even after Bitcoin surged above $73,500 on Oct. 29.
In China, traders showed their adaptability as the USD Tether (USDT) traded close to its fair worth compared to the official exchange rate between the US Dollar (USD) and Chinese Yuan (CNY). When there’s a significant need for cryptocurrency withdrawals, USDT usually trades at a premium of 2% or more. It’s worth noting that market indicators for derivatives don’t suggest any tension, and traders seem optimistic that the bull market will rebound after the U.S. presidential election, indicating their confidence in its continuation.
As someone with a background in both technology and finance, I’ve always been fascinated by the intersection of these two fields, particularly when it comes to cryptocurrencies and blockchain technology. However, it’s important to note that this article is intended for informational purposes only and should not be taken as legal or investment advice. My personal views, thoughts, and opinions expressed here are based on my own experiences and research, but they do not necessarily reflect the views of CryptoMoon. Always conduct your own due diligence before making any financial decisions.
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2024-11-04 23:50