It’s been a quiet last few weeks for all markets, Bitcoin and crypto included. Barring some short-term volatility, the legacy and crypto markets are range bound and trade well below local lows. Some analysts like Thomas Lee, co-founder of Fundstrat Global Advisors, are charting a move back to all-time highs in these markets. But Avi Felman, a trader at crypto firm BlockTower Capital, believes that the most likely trajectory of the markets will be a downtrend rather than large bouts of volatility.
Bitcoin, cryptocurrencies and stock markets will fall in the elections
Felman points out that around the election, markets are historically in range as there is uncertainty about the candidates, meaning there is uncertainty about what policies will be implemented once January rolls around. However, he explained that this time, there are more deficiencies than normal due to possible conflicts arising from the vote-by-mail ballots:
“The market has been raising a lot of cash, taking risks for the elections. Historically, the post-election month is pretty good for equities, but we’re seeing a lot of shorts due to concerns and mail-in ballots and the closed nature of the race. “
Speaking on crypto, in particular, Felman pointed out that the crypto space is unlikely to see strong fiat inflows until this uncertainty passes:
“So we have people with a lot of cash, but without a really new supply side. The base case is a sideways downward shift, but with real potential for a move that ends with everyone chasing. There is also a timeline on this movement. I think there is a way to play that. “
On the bright side, the value of US dollar stablecoins recently surpassed $ 20 billion, which means there may be an influx of capital to Bitcoin, Ethereum, and other major crypto assets if there is a proper reason among investors to do what. US Senate stimulus, electoral certainty, or other macro factors.
What comes next?
What comes after the choice of Bitcoin and cryptocurrencies? Nothing, in particular, but analysts are optimistic about the long-term outlook for this market despite any consolidation that may be happening in the near term. Raoul Pal, CEO of Real Vision and former head of hedge fund sales at Goldman Sachs recently commented that macroeconomic trends like the Federal Reserve’s commitment to inflation make Bitcoin a good asset to own:
“I know bitcoin and gold are selling right now and may go further, but with Powell today, he tells you that they have no desire to increase rates and a skewed desire to print more. That plays off the bullish bias inherent in both assets. “
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