Bitcoin experienced a significant increase in volatility as anxiety surrounding the U.S. election began to impact market gains. The cryptocurrency rally that occurred during the afternoon in the United States quickly reversed course, causing Bitcoin (BTC) to surge to $70,500 from around $67,000 earlier in the day, only to drop 2% within an hour and briefly fall below $69,000. Despite this sudden fluctuation, Bitcoin was still trading at $69,000 at the time of the report, showing an overall increase of more than 2% over the past 24 hours.
During the same period, the CoinDesk 20 Index, which represents the broader cryptocurrency market, recorded a 3% gain. This increase was driven by the native tokens of Near (NEAR), Aptos (APT), and Hedera (HBAR), which saw gains of 6%-7%.
Ether (ETH), on the other hand, continued to underperform compared to Bitcoin, with the ETH/BTC ratio dropping below 0.035 for the first time since April 2021. While ETH experienced a modest daily gain of 0.4%, litecoin (LTC) remained relatively flat in comparison.
The sudden sell-off in the market coincided with a 20% drop in Trump Media & Technology Group (DJT), the company responsible for the Truth Social social media platform founded by former President Donald Trump. Despite the significant price drop, the cause was not immediately clear, as the odds of Trump winning the election only slightly decreased from 62% to 61% on the prediction platform Polymarket.
Looking ahead, market analysts anticipate that Bitcoin will continue to trade within a narrow range leading up to the election night in the U.S. This period is expected to be a source of uncertainty for cryptocurrency prices, with the outcome of the election likely to influence market reactions. A Trump victory is predicted to result in a temporary price increase, while a win for Kamala Harris could lead to a decrease in prices.
However, the worst-case scenario for risk assets, including cryptocurrencies, would be a delayed or contested election, similar to the situation in the 2000 election. Such an event could prolong market volatility and uncertainty until a resolution is reached, potentially leading to a sell-off in risk assets in the interim.
In conclusion, the cryptocurrency market, particularly Bitcoin, is experiencing heightened volatility as the U.S. election approaches. Traders are advised to closely monitor developments in the election process and prepare for potential market reactions based on the outcome.
