Bitcoin returns to $71,000. How will the crypto market perform before and after the U.S. election?

On October 29, BTC returned to above $71,500, setting a new high since June 7 this year, and is likely to surpass its previous historical high of $73,777.

At the same time, the total market value of cryptocurrencies also rebounded to over $2.5 trillion. Many analysis agencies believe that the biggest driving force behind the hot market is Trump's victory, but there is still about a week before the final result of the US election is released, and it is still unknown who will win. Judging from the current financial market reaction, the "Trump trade" is very obvious, but investors still need to be vigilant about potential market risks.

1. The US election is approaching, who will have the last laugh?

Bitfinex Alpha report shows that Bitcoin volatility has increased, and election factors have become a key influence. Driven by geopolitics and Trump's election transactions, Bitcoin rebounded after a 6.2% volatility last week. Election expectations have led to active options trading, and the implied volatility after the election day may reach 100 per day. But despite the increase in short-term volatility, Bitcoin has risen 30% since its low in September, and has risen to more than $71,500 at the time of writing.

At the data level, Deribit data shows that the number of Bitcoin call options expiring on November 8 is twice that of put options.

Currently, the probability of Trump winning the US presidential election on the prediction market Polymarket has risen to 66.3%, while Harris's probability of winning has dropped to 33.7%, with Trump leading by 32.6 percentage points.

Recently, Trump's poll approval rating has surpassed Harris for the first time since early August.

The average poll of the RealClearPolitcs platform as of October 28 showed that Trump had a slight advantage of 0.2 percentage points over Harris. The support rates of the two were 48.6% and 48.4%, respectively. As of October 23, Harris was still leading Trump by 49.1% to 48.5%.

In addition, according to the calculation results published on the website of Florida State University, more than 43.3 million American citizens have voted in advance in the presidential election to be held on November 5. In the short time left before the election, if there is no major "October surprise", the main theme of the final stage of the election will remain in a stalemate.

However, the “Trump deal” in financial markets has become very obvious, especially in the crypto market, with BTC taking the lead in reaching $71,500.

On October 29, the three major U.S. stock indexes closed higher, and cryptocurrency stocks generally rose, including MARA Holdings up 11%, Riot Platforms up nearly 10%, and MicroStrategy up nearly 9%. In addition, Trump Media Technology Group (DJT.O) rose as much as 21.6%.

In the crypto space, Trump-themed meme coins have generally risen. The Trump family crypto project World Liberty Financial (WLFI) has also announced plans to issue stablecoins.

Meanwhile, legendary analyst Martin Armstrong predicts a Trump landslide victory, and Harris’s “real approval rating” has actually dropped to 6.5% to 7.5%. The Democratic “Deep State” has entered panic mode.

In terms of trading, large amounts of money also chose to bet on Trump. On October 29, a whale once again invested 1 million USDC to bet on Trump to win the US election. In the past 4 days, the whale has spent 5 million USDC to buy 7.54 million "shares" of Trump's victory in the US election.

2. A historic week: a fierce battle between bullish and bearish views

Currently, Bitcoin has returned to above $70,000, only $2,000 away from its all-time high. Many investors generally expect that Bitcoin will break its previous high and set a new record before the US election. However, some institutions hold the opposite view that there are still many uncertainties in the current market, especially the market may face a correction after the election.

1. Steady bullish

Bloomberg ETF analyst: SOL, XRP ETF listing applications are "call options for Trump's victory." In addition, if Trump wins... he will definitely appoint a more liberal SEC chairman.

Arthur Hayes: Family office Maelstrom puts 5% of its funds into USDe and maintains a large long position in cryptocurrencies. It is using Ethena Lab's USDe stablecoin to hedge against uncertainty while maintaining a large number of bullish bets on Bitcoin, Ethereum and other cryptocurrencies.

Matrixport: The US election may become a key catalyst for the crypto market. South Korea is known for its active altcoin trading, but the current trading volume is still sluggish, and the possibility of a sharp rebound in altcoins is not high. Bitcoin's funding rate has always been consistent with South Korea's trading volume trends. Higher funding rates usually attract hedge funds to buy ETFs to earn price differences.

However, the current Bitcoin funding rate, South Korean trading volume and Bitcoin spot ETF purchases are all lower than the levels in March 2024. Next week's US presidential election may become a key catalyst to ignite new market momentum.

Trader Eugene: The market will continue to rise after the election. I am optimistic about Solana. The speculative long positions in October have been basically wiped out.

DWF Labs Co-founder: The next two quarters are a bullish cycle, the market is still unstable but the overall direction is positive. October (Uptober) is the first month of the bullish cycle from the fourth quarter of 2024 to the first quarter of 2025. The market is still very unstable, but the direction is positive.

As an action-oriented person, BlackRock has bought an additional 34,085 bitcoins worth about $2.3 billion in the past two weeks alone. The company currently holds more than 400,000 bitcoins, worth nearly $26.98 billion.

2. Bearish: A sell-off may occur after the election

The chief investment officer of Temasek International said that if Trump returns to the White House, it may not have a positive impact on the global economy and financial markets. He pointed out that the Trump administration's policies will lead to a slowdown in global economic growth, which will eventually affect American companies. He also warned that higher interest rates and a stronger dollar will have an adverse impact on emerging markets.

Nomura: If a "Harris election deadlock/divided Congress" situation occurs, all types of assets are at risk of reversal. There will be some upside for U.S. Treasuries and short-term interest rates, as well as the risk of liquidation of positions betting on Trump's sweep of "overheated economy" and deregulation-themed stocks; gold/cryptocurrency will be squeezed under the Harris "deadlock" trade; if a blue sweep occurs in which the Democrats take Congress, the stock market may fall 7-10% in the next one to three months.

Professor at Columbia Business School: Trump's presidency could have a "negative" impact on Memecoins because they are a "form of economic populism and a statement against injustice." U.S. regulation is not good for Memecoins, and most people have lost money on Memecoins.

Greeks.live Macro Researcher: The market's attention to this US election is lower than expected. Friday's non-farm payrolls and unemployment data are worth paying attention to. They are the last important economic data before the election, and the Federal Reserve officials have almost no speeches scheduled. The election is approaching, and the market's attention to this election is lower than expected, but there is still strong uncertainty.

"Fed mouthpiece": The US may face new inflation risks after the election. The Fed's two-and-a-half-year fight to reduce inflation seems to have been successful, but the US election may change that. Both candidates support policies that promote economic growth, which may prevent inflation from falling further. However, economists and even conservative advisers worry that the ideas supported by Trump are particularly likely to ignite the flames of inflation. These include his proposals to impose comprehensive tariffs on imported goods, expel workers, and rely on the Federal Reserve to lower interest rates.

Taken together, these policies all move in the direction of inflation. Trump’s proposals could put him in a new battle with the Federal Reserve, which is tasked with keeping inflation low. Any factors that reignite inflation could cause officials to slow or even halt their plans to cut interest rates .

Economist Peter Schiff: Bitcoin may fall due to "Trump sell-off". As Trump's approval rating rises, Bitcoin has not risen along with other Trump-related assets. The reason may be that speculators have already bought in advance, resulting in weakened demand. It is predicted that Bitcoin may face a "Trump sell-off" and believes that under inflationary pressure, gold's safe-haven advantage is more prominent and is entering a bull market.

Tyr Capital Chief Investment Officer: Bitcoin may face selling pressure after the US election. Bitcoin prices may rise sharply before the US election on November 5, but selling pressure may appear after the election results are announced due to profit-taking.

International Monetary Fund (IMF): The world faces a risk of low growth and high debt. The world is in danger of falling into a low-growth, high-debt path, which will reduce the resources that governments have to improve opportunities for their people and address climate change and other challenges.

The upcoming U.S. presidential election on November 5 has raised concerns that Americans, stung by high inflation under Democratic President Joe Biden, could return Republican candidate Donald Trump to the White House, ushering in a new era of protectionist trade policies and trillions of dollars in additional U.S. debt.

summary

Judging from the current crypto market, BTC is only one step away from its all-time high. As the US election approaches, the expectation of Trump's victory has also prompted the crypto market to continue to rise. So judging from the current financial market and signs from all parties, Trump has a high probability of winning. However, there is still a week before the election results, and the economic situation is volatile. While investors are optimistic about the start of a new round of bull market, they should also be wary of the risk of market fluctuations.