Bitcoin (BTC) experienced a sharp decline below $69,000 on Sunday, leading to a significant amount of market liquidations. Interestingly, analysts have observed a correlation between this price drop and a decrease in the winning odds of US Republican presidential candidate Donald Trump ahead of the upcoming general elections on November 5.
The recent price correction in Bitcoin comes after a strong rally in October, where the cryptocurrency saw a 20% increase in value. Initially trading above $73,000, Bitcoin found support around $69,000 before dropping further. On Sunday, the price hit a low of $67,960, resulting in the liquidation of 104,787 trading positions and a loss of $232.6 million. Long traders accounted for the majority of these liquidations, with $198.6 million in losses compared to only $34 million in short positions.
As of the latest update, Bitcoin has retraced to above $68,000, with uncertainty surrounding its next price movement. If the current downtrend continues, Bitcoin could potentially fall as low as $55,000, maintaining a range-bound movement seen over the past eight months. On the other hand, there is a possibility of a price recovery back to its all-time high of $73,750, driven by bullish sentiments, increased ETF inflows, the upcoming US election, and expectations of a Federal Reserve rate cut.
The decline in Bitcoin’s price on Sunday coincided with a decrease in the winning probability of US presidential candidate Donald Trump. Data from Polymarket showed that Trump’s chances of winning the election dropped by 4.3% after his opponent, Democrat candidate and US Vice President Kamala Harris, became the favorite to win in Pennsylvania. While Trump still holds a lead with a 53.8% chance of winning compared to Harris’s 46.1%, the potential impact of a Trump loss on Bitcoin’s price remains a concern.
Historical price data suggests that any price decline in Bitcoin following the election result would likely be temporary, as the cryptocurrency has historically embarked on a bullish trajectory regardless of the outcome. At the time of writing, Bitcoin is trading at $68,471, reflecting a 1.38% loss in the past 24 hours, with a daily trading volume down by 40.54% at $24.40 billion.
In conclusion, the recent price drop in Bitcoin and its correlation with the US election dynamics highlight the interconnectedness of global events and cryptocurrency markets. While short-term fluctuations may occur based on political developments, the long-term outlook for Bitcoin remains positive, driven by factors such as market sentiment, institutional interest, and macroeconomic trends.
Disclaimer: Featured image from Yahoo Finance, chart from Tradingview.
