Crypto markets dip in anticipation of US elections

Bitcoin price dipped below $67,000 on Monday ahead of the US elections on Tuesday. If the BTC price declines, support can be found at $65,000, while resistance may be encountered at the all-time high of $73,800. 

Ethereum price also edged lower on Monday, dropping below $2,400. If Ethereum's price declines, it may encounter support near $2,300, while if it increases, resistance may be encountered near $2,760.

Fluctuating risk sentiment is causing volatility in crypto markets. The US elections on November 5th are attracting considerable market attention. Crypto markets have gained strength due to rising expectations that Donald Trump will win the presidential elections. Trump’s odds of winning the elections are growing in the polls, with new polls showing that Trump and Harris are neck-in-neck. Trump’s proposed tariffs and tax policies will support economic growth, boosting high-risk assets such as cryptocurrencies. In addition, Trump has openly declared his support of crypto markets, announcing that he will make the US ‘the crypto capital of the planet’. Bitcoin price rose above $73,500 last week on expectations that Trump might win the Presidential race, coming close to its all-time high reached in March. 

Cryptocurrency prices are affected by central banks’ interest rates. High interest rates are restricting economic growth, putting pressure on risk assets, while the promise of rate cuts boosts crypto markets. The US Federal Reserve performed a drastic rate cut of 50 basisasis points in September, bringing its interest rate down to a target range of 4.75% to 5.00%. 

The US Federal Reserve will announce its interest rate decision on November 7th and is expected to lower interest rates by 25 basis points this week. After the meeting, market participants will focus on Fed Chair Jerome Powell’s press conference for hints on the Fed’s rate outlook.

Concerns of a broadening conflict in the Middle East are promoting a risk aversion sentiment, lowering the appeal of high-risk assets such as cryptocurrencies. The conflict between Israel and Hamas continues to escalate, putting pressure on risk assets such as cryptocurrencies. 

In the past few weeks, markets had been bracing for Israel’s retaliatory attack against Iran. Israel’s attack over the weekend, however, did not inflict substantial damage. The Iranian government announced that there would be an appropriate response to Israel’s attack, but Iran’s President emphasized that they do not seek a war with Israel. On Thursday, however, a report stating that Iran plans an attack against Israel in the coming days from Iraqi soil, put pressure on crypto markets. In addition, Iran’s Supreme Leader Ayatollah Ali Khamenei threatened Israel with a crushing response on Saturday, which is likely to cause risk sentiment to sour.

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Written by:
Myrsini Giannouli

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