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Despite ‘Trump Trade’ Jitters, Analysts Say On-Chain Metrics Bullish for Bitcoin, Likely Providing ‘Tailwind for Market’
- Bitcoin rallied 11% in October, breaking months of sideways trading, but remains volatile.
- Market jitters tied to Trump’s potential election win impact Bitcoin, as tighter monetary policy from his pro-growth agenda could dampen enthusiasm.
- Recent regulatory approvals and profitable positions for short-term holders have positively influenced market sentiment.
- Analysts suggest Bitcoin is transitioning from an enthusiastic to a euphoric bull market.
It looked like Bitcoin would be breaking out of its many months-long sideways movement with the rally in mid-October. While the month started off shaky, we soon saw a run-up from US$59.4k (AU$89.5k) on 11 October to a high of US$69.2k (AU$104.3k) just ten days later, on the 21st.
Related: SEC Filings Show Spot Bitcoin ETFs Held by Approximately 20% Institutional Investors
However, the past few days we have seen similar up-and-down movements by BTC as in the past few months.
Implications of Trump Return to White House
Bitcoin, which is seen as a “Trump trade” by many traders, is likely facing these market jitters due to the probability of Trump’s return to the White House, impacting broader financial trends.
Bond yields and the US dollar have risen as online prediction markets favour Trump, who advocates a pro-growth agenda that could tighten monetary policy. This has caused Bitcoin and stocks to fluctuate, with Bitcoin nearing its first weekly loss in three weeks.
Tony Sycamore, a market analyst for Australian trading platform IG, told Bloomberg that while Trump’s pro-crypto stance has boosted the industry, his broader economic policies may moderate this optimism.
Absolutely, yes, the selloff in stocks, higher US dollar and higher yields all equal a tightening in financial conditions. Not good for crypto at the pointy end of the spectrum. Some will point out that financial conditions were loose to start with, but it’s more the speed that the tightening is playing out.
Tony Sycamore, IG Unrealised Profit Cohort Could Boost Market, Say Analysts
However, besides the question of who moves into the White House, there are other influences on Bitcoin and Co. Glassnode analysts wrote that on-chain data shows that short-term holders are now largely profitable which could boost market sentiment.
Related: Tesla Reports Strong Q3 Profits—But Did They Offload Bitcoin?
From an On-chain perspective, all sub-age-groups within the Short-Term Holder cohort now hold an unrealized profit, likely a tailwind for market sentiment.
Glassnode This positive sentiment can lead to more buying activity as other investors notice the gains and may decide to invest as well. This cycle can help sustain or even further increase market momentum.
The analysts added that the price is trying to move from an Enthusiastic Bull Market to a Euphoric Bull Market, “distinguished by a sustained break above the 2021 ATH of $69k.”
Author
Aaron Feuerstein
Aaron Feuerstein is a freelance writer based in Melbourne. His focus is on decentralised finance and the regulatory space surrounding blockchain. He holds a Master's in Accounting. When he is not studying the latest legal case, he enjoys his time as a modest but eager hobby cook.
