Why the Crypto Market Is Down Today? U.S. Election Impacts the Price of Bitcoin

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The crypto market is down today, Bitcoin (BTC), closed the first week of November with a short-term bearish outlook. More traders have feared the anticipated crypto volatility amid this week’s conclusion of the 2024 U.S. election and potential Fed rate cuts.

The Federal Reserve is poised to cut rates by 25 basis points in November, following a 50-point cut in September. With inflation at 2.1% and wage growth slowing to 0.8%, traders are on alert as the Fed’s meeting coincides with the election, potentially impacting the crypto market.

But what’s behind all this back-and-forth?

$350M Liquidation Shakes Crypto Market

In the election week, liquidations in the crypto market nearly reached $350 million on November 3, as Bitcoin briefly dipped below the critical $69,000 mark. Traders are exhibiting heightened anxiety as they await the results of the upcoming U.S. presidential election. According to CoinGlass, a staggering $349.78 million was liquidated, split between $259.7 million in long positions and $90.08 million in short positions. This surge in liquidations represents the largest single-day event since October 25, when Bitcoin was unable to maintain its rally past $70,000.

Bitcoin’s Recent Price Fluctuations

Over the past week, Bitcoin has experienced significant volatility. Starting at around $67,700 on October 28, it peaked at nearly $73,300 just a day later before declining sharply. On November 3, it hit a low of $67,719, only to recover slightly, currently trading around $69,145. Other major altcoins, such as Ethereum (ETH), Dogecoin (DOGE), Solana (SOL), Ripple (XRP), and Litecoin (LTC), showed mixed performance with minor gains and dips. The Market Fear & Greed Index remained neutral at 53 out of 100, according to CoinMarketCap. 

Election Week May Drop BTC Further

Market sentiment is closely tied to the political climate, with betting odds on Polymarket showing a tightening gap between presidential candidates Donald Trump and Kamala Harris. Trump’s odds surged earlier in October, peaking at 67% on October 30, but have since corrected to 56%. This shift reflects the unpredictable nature of the election and its potential impact on the crypto market. Historically, the crypto industry views Trump as a more favorable candidate, given his promises to overhaul regulatory frameworks that could benefit cryptocurrencies.

Potential Outcomes and Trader Predictions

Speculation among traders suggests that a Trump victory could propel Bitcoin to $100,000, while a Harris win could result in a significant price drop by year-end. In light of these dynamics, crypto trader Daan Crypto Trades anticipates that Bitcoin could see at least a 10% price movement in either direction depending on the election outcome. 

How do you feel about the current market volatility? Are you planning to adjust your trading strategy based on the election?