Bitcoin [BTC] could be in for a wild ride in light of the upcoming US Presidential elections, as the election results are expected to have a substantial impact on its price trajectory.
Historically, BTC has exhibited significant price fluctuations during election cycles, and it is likely to follow a similar pattern this time around.
At the current moment, Bitcoin’s Fear and Greed Index is indicating a high level of optimism, suggesting that the price may surge due to the influence of the US election results on the cryptocurrency markets.
The US elections have consistently wielded influence over cryptocurrencies, particularly Bitcoin. Given the United States’ status as one of the world’s leading economies, its political landscape often dictates market liquidity.
During the last three election cycles, Bitcoin has seen positive price movements, with traders anticipating profitable outcomes amidst political transitions.
Should Donald Trump secure victory over Kamala Harris, many experts predict a more robust rally for BTC, driven by expectations of favorable regulations towards cryptocurrencies. However, a Harris victory could still be beneficial for BTC, albeit with more subdued gains.
Bitcoin’s Price Performance in Historical Context and MVRV Z-Score Analysis
Reflecting on past election years provides valuable insights into how Bitcoin may perform moving forward. In 2012, Bitcoin witnessed a surge of over 10,000%, followed by gains of 2,698% in 2016, and a significant rise of 386% during the 2020 election cycle.
While each subsequent election year delivered diminishing returns, Bitcoin remains poised to react to the outcome of the elections with significant price movements.
Given the increased focus on Bitcoin and cryptocurrencies in the current election cycle, heightened volatility may be on the horizon for BTC.
A Trump win could trigger more pronounced price surges, whereas a Harris victory might still lead to gains, albeit at a more gradual pace.
Regarding Bitcoin’s valuation metrics, the MVRV Z-Score suggests considerable upside potential currently. This metric compares market capitalization with realized cap to determine whether BTC is trading above or below its intrinsic value.
With the MVRV Z-Score hovering around 2, Bitcoin appears to have room to grow towards 6, a level where long-term investors might begin taking profits, potentially leading to a market correction.
Historically, the MVRV Z-Score has proven to be a reliable indicator in identifying Bitcoin’s market peaks, and the present data indicates that Bitcoin has not yet reached its peak valuation.
Traders monitoring this metric anticipate that Bitcoin could sustain its upward trend as buying pressure continues to build.
Strength in Active Network Addresses
Technical indicators also support the possibility of a price rally. The 30-day moving average has recently surpassed the 365-day moving average, creating a “golden cross,” which is typically seen as a bullish signal signaling strong upward momentum.
This crossover, combined with escalating transaction volumes—nearly double compared to the 2021 cycle—hints at increasing market activity and rising investor interest.
However, if the 30-day moving average fails to stay above the 365-day moving average, Bitcoin’s price momentum could weaken, resembling the mid-2021 phase when momentum faded.
Bitcoin’s price outlook appears to be gearing up for significant shifts post the election outcome. While overall sentiment remains optimistic, investors should exercise caution as market dynamics are subject to rapid changes.
Given the anticipated rise in volatility, Bitcoin’s future trajectory will be heavily influenced by the political climate and the sustained interest from investors.