Pre-election Bitcoin volatility hits high

November 04, 2024

Reading time: 5 minutes

Crypto liquidations spike to $350M amid election-induced price drops: Bitcoin dips below $69K

Key points:

  • Liquidations in the crypto market reached approximately $350 million as Bitcoin fell below $69,000.

  • The sharp price fluctuations highlight traders' reactions to the tightening race between presidential candidates, amplifying market anxiety.

News - The cryptocurrency market experienced significant liquidations, totaling around $349.8 million, as Bitcoin's price briefly dipped below $69,000. This surge in liquidations was primarily driven by trader jitters ahead of the U.S. presidential election. On November 3, liquidations included $259.7 million from long positions and $90.1 million from short positions, marking the largest single-day liquidation since late October.

Bitcoin has seen dramatic price movements over the past week, starting at approximately $67,700, peaking near $73,300, and then dropping to a low of $67,719 before recovering to $69,145.

Market sentiment - The tightening odds between presidential candidates Donald Trump and Kamala Harris on crypto betting platform Polymarket have added to market anxiety. Trump's winning odds have decreased from 67% to 56%, reflecting shifting sentiments among traders. The outcome of the election is expected to have a substantial impact on the crypto market, as Trump is perceived as more favorable to cryptocurrency.

Potential outcomes - Some traders speculate that a Trump victory could propel Bitcoin's price to new heights, potentially hitting $100,000. Conversely, analysts from Bernstein suggest that a Harris win could result in a downward price adjustment by year-end. The uncertainty surrounding the election is leading to predictions of significant market movements, with expectations of at least a 10% price shift in either direction depending on the election outcome.

Bitcoin volatility peaks ahead of U.S. election

Key points:

  • Bitcoin's implied volatility has surged to 63.24%, the highest since July, reflecting heightened market uncertainty.

  • The current price stands at approximately $69,100, with a modest increase of 1.2% on the day.

News - With the U.S. presidential election just a day away, Bitcoin is experiencing a notable spike in expected price volatility, as indicated by Deribit’s implied volatility index, which has reached 63.24% on an annualized basis. This increase signals a growing sentiment of uncertainty among investors regarding potential market fluctuations in response to the election results. Currently, Bitcoin's price is hovering around $69,100, up 1.2% for the day.

Market analysts predict that Bitcoin could face price swings if the election results are contentious, particularly in swing states where close races could lead to legal disputes. Historical data suggests that Bitcoin has often dipped before elections—recording declines of 10.2% in 2016 and 6.1% in 2020—but has rebounded significantly afterward.

Investor sentiment and market dynamics - The growing apprehension surrounding the election is fostering a cautious approach among traders. Many are adjusting their positions in anticipation of potential volatility. This is compounded by broader economic factors, such as upcoming Federal Reserve meetings and critical economic indicators, which are likely to influence market sentiment in the coming days.

Long-term implications for the crypto market - As the election unfolds, the evolving political landscape is expected to have lasting effects on cryptocurrency regulations. With both major parties increasingly recognizing the importance of clear crypto policies, the outcomes of this election may shape the regulatory framework and public perception of digital assets in the years to come.

Singapore advances tokenization to revolutionize financial transactions

Key points:

  • Singapore is intensifying efforts to commercialize tokenization, focusing on integrating blockchain technology into the financial sector.

  • The Monetary Authority of Singapore (MAS) is promoting the adoption of tokenized assets to enhance efficiency and transparency.

News - Singapore is ramping up its initiatives to commercialize tokenization, aiming to embed blockchain technology into traditional financial systems. The Monetary Authority of Singapore (MAS) is at the forefront of this movement, advocating for the use of tokenized assets, including cash and trade finance instruments, to improve transaction efficiency and transparency.

These moves reflect a broader trend in which tokenization is seen as a key driver for innovation in the financial sector, enabling a more seamless and transparent transaction process.

Catalysts for change - In alignment with this push, the MAS has established the Global Finance & Technology Network (GFTN), a non-profit organization designed to bolster Singapore's fintech ecosystem globally. GFTN is tasked with organizing fintech festivals, providing advisory services, and supporting technology-related startups, reinforcing Singapore’s position as a leader in blockchain innovation.

Implications for the future - These developments underscore Singapore’s commitment to becoming a global hub for tokenization and blockchain technology. By fostering an environment conducive to innovation, Singapore is strategically positioning itself to play a pivotal role in the future of the global financial landscape.

Pakistan government proposes amendments to legalize cryptocurrencies

Key points:

  • The Pakistani government is seeking to amend the State Bank of Pakistan Act to facilitate the legalization of cryptocurrencies.

  • Proposed changes would empower the central bank to issue and regulate digital currencies.

News - In a significant move toward embracing digital currencies, the Pakistani government plans to amend the State Bank of Pakistan Act. This amendment aims to legalize cryptocurrencies, enabling the central bank to issue and regulate these digital assets. Additionally, the proposed changes will allow dual nationals to hold senior positions within the central bank, enhancing the potential for expertise in this emerging sector.

Regulatory framework - The government's initiative reflects a growing recognition of the need to integrate cryptocurrencies into the formal economy. By establishing a clear regulatory framework, Pakistan aims to create a safer environment for crypto investments while fostering innovation in the financial sector.

Implications for the future - These developments could position Pakistan as a progressive player in the cryptocurrency space, attracting investment and enhancing financial inclusion. As the government moves forward with these proposals, the implications for the local economy and the broader crypto landscape will be closely monitored by stakeholders both domestically and internationally.

Did you know?

  • The average age of a Bitcoin miner is around 35 years, highlighting a demographic skew towards younger, tech-savvy individuals engaged in cryptocurrency mining.

  • Some cryptocurrencies, like IOTA and Nano, use a unique technology called Directed Acyclic Graph (DAG) instead of traditional blockchain, allowing for feeless transactions and infinite scalability.

  • Over 60% of Bitcoin's supply has not moved in over a year, indicating that many holders are opting for long-term storage rather than trading, which can lead to reduced market liquidity.

Top 3 coins of the day

Cardano (ADA)

Key points:

  • At press time, ADA was trading at $0.33.

  • It experienced a slight decrease of 0.36% during the trading session, reflecting ongoing consolidation after recent volatility.

What you should know:

The daily chart indicated that ADA was trading below its 50-day Simple Moving Average (SMA) at $0.35, suggesting a bearish trend​. Key levels of interest include the recent high and support around $0.32. The Directional Movement Index (DMI) displayed a -DI of 25.66, indicating that selling pressure has been stronger than buying pressure, with the ADX at 15.83 suggesting a weak overall trend​. Additionally, the downward trendline emphasized the resistance level that the price must break through to regain bullish momentum. For ADA to reverse its current trend, it needs to break above the 50-day SMA and the trendline resistance. Conversely, if it drops below $0.32, further selling pressure could ensue, testing lower support levels.

Beldex (BDX)

Key points:

  • At press time, BDX was trading at $0.078.

  • It experienced a slight decrease of 0.42% during the trading session, with a rise of approximately 3.93% over the past 24 hours​.

What you should know:

On the daily timeframe, BDX was trading near the upper Bollinger Band, suggesting that it may be approaching overbought conditions. This proximity implies potential resistance, which could lead to a reversal if selling pressure increases​. The Relative Strength Index (RSI) at 63.53 indicated that BDX has been nearing overbought territory. The high RSI value signaled that a correction may be possible if buying momentum wanes​. Additionally, the volume shown on the chart reflected a healthy level of trading activity, which is essential for validating the price movements. For BDX to maintain its upward trajectory, it should continue to push against the upper Bollinger Band. Conversely, if the price shows weakness and drops significantly, it may signal a pullback and test lower support levels.

Polygon (MATIC)

Key points:

  • At press time, MATIC was trading at $0.29.

  • It experienced a decrease of 1.59% during the trading session, reflecting ongoing bearish momentum.

What you should know:

MATIC faced key resistance levels at $0.37, $0.43, and $0.51 on the daily chart. These levels are significant for monitoring potential price reversals. The Awesome Oscillator (AO) showed negative momentum with red bars, reflecting bearish sentiment in the market​. Additionally, the Chaikin Money Flow (CMF) at 0.06 exhibited slight accumulation, but this low value indicated that buying pressure has been weak and may lead to further declines if selling continues​. For MATIC to reverse its current trend, it must break above the nearest resistance levels. Conversely, if the price continues to drop below support levels, it could signal an increased bearish trend and further selling pressure.

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