Bitcoin and crypto prices are braced for volatility through the U.S. election, with odds on the Polymarket prediction platform suddenly narrowing.
The bitcoin price is hovering just under its all-time high of over $70,000 per bitcoin while Tesla billionaire Elon Musk’s radical plan to avert a “financial emergency” has spurred huge bets on the bitcoin price.
Now, as BlackRock’s chief executive has issued a Federal Reserve warning to markets, traders are braced for the Fed and China to feed into a “perfect storm” for the bitcoin price in the fourth quarter.
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Federal Reserve chair Jerome Powell has helped the bitcoin price soar this year as the Fed gears up … [+]
“The convergence of election uncertainty, the “Trump trade” narrative, and favorable fourth quarter seasonality create a perfect storm for bitcoin,” analysts with the Bitfinex crypto exchange wrote in emailed comments.
“The fourth quarter has been consistently bullish in halving years, with a median quarterly return of 31.34%,” Bitfinex’s analysts wrote, referring to the scheduled cut to bitcoin’s supply that happened earlier this year. “This strong seasonality effect, combined with record-breaking open interest in bitcoin options and futures, underscores the optimism among market participants heading into the final stretch of the year.”
Donald Trump’s embrace of bitcoin and crypto through 2024 has pushed the bitcoin price higher as traders bet the U.S. could lead a bitcoin adoption boom if he retakes the White House.
Trump has floated plans to create a U.S. bitcoin strategic reserve if reelected—predicting the bitcoin price could eventually eclipse gold—and the possibility of using bitcoin to pay off the U.S.’s $35 trillion debt pile. Trump has also said he wants all bitcoin to be mined in the U.S., repeatedly saying he will make the U.S. the world’s “crypto capital.”
Meanwhile, the Federal Reserve is widely expected to further cut interest rates when the Federal Open Market Committee meets this week, adding to its surprise 50 basis point cut in September.
“With most analysts agreeing to a 0.25% cut this week, the implications for the financial markets might be resounding,” Agne Linge, head of growth at WeFi, said in emailed comments.
“In the long term, bitcoin will benefit because cutting interest rates aids the money lending market with more readily available liquidity. This liquidity dilutes the value of the U.S. dollar, whose purchasing power and store of wealth are pushed down considerably.”
Alongside the Fed loosening its monetary policy, China is expected to accelerate its program of stimulus measures this week—something some high-profile bitcoin traders have said they expect to kick off the next bitcoin price bull run.
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The bitcoin price has rocketed higher this year, powered by Donald Trump’s support for bitcoin and … [+]
“Key events of the week also include the Chinese government meeting, from which investors expect information on new monetary stimulus packages,” Maria Carola, the chief executive of cryptocurrency exchange StealthEX, said in emailed comments.
Last week, a leak revealed China could approve 10 trillion yuan ($1.4 trillion) in extra debt to revive its economy, with the package increased if Trump wins the U.S. presidential election, it was reported by Reuters, citing anonymous sources.
“The size of China’s fiscal stimulus package would be around 10~20% bigger under a Trump win than under the scenario of a Harris win,” Ting Lu, chief China economist at Nomura, said in a note seen by CNBC.
Arthur Hayes, a cofounder of bitcoin and crypto derivatives pioneer BitMex who went on to set up the Maelstrom investment fund, has predicted a China “bazooka” combined with the Fed easing will create a “glorious” bitcoin and crypto bull market going into 2025.
