Markets spent the months following the March madness dubbed Black Thursday in recovery mode, but the recovery turned into a full-scale rally somewhere along the line.
Bitcoin surged above $10,000, gold set a record for the highest price since the Great Recession, and stocks indices were back to setting new all-time highs in no time flat. As well as Bitcoin performed, the rest of the crypto market also erupted with enormous profits often ten times that of the top crypto asset.
Profit-taking, portfolio rebalancing, and a reassessment of risk heading into Q4 – a pivotal time with one of the most controversial US Presidential elections yet – has led to a sharp pullback in markets, especially in the high volatility asset class of crypto.
PrimeXBT research has taken a look back at past US presidential elections and how they’ve impacted Bitcoin price action, and aims to shed some light on what to expect throughout the rest of 2020 for Bitcoin and potentially the rest of the financial world.
Pivotal US presidential election leads with protest, pandemic, and the dollar’s decline
This coming presidential election may be the most important in United States history, and its future hinges on selecting the right candidate.
The country, its economy, and its citizens are in complete chaos and turmoil. The pandemic led to a record number of job losses and unprecedented government stimulus spending. The US Federal Reserve added trillions to its balance sheet and inflated the global money supply.
Stimulus efforts have weakened the dollar’s strength globally, which in response has allowed competitors like Bitcoin, gold, and other currencies like the yuan to gain ground. And while talk of the dollar’s demise may be overstated and exaggerated, it has dramatically impacted markets.
But a weak dollar also shows just how much the United States is floundering as a result of the pandemic. At the same time, widespread political and social unrest is erupting into the streets and leading to violence, looting, and fear.
The country is divided, but neither side is fully satisfied with either of the two polarizing presidential candidates. However, who is chosen could change the country’s, the dollar’s, and the global economy’s trajectory for years to come. And with so much on the line, investors are wise to be fearful after months of greed.
Data shows Bitcoin bull market breakout arrives after taking oath of office
It is clear to see why investors are approaching Q4 with caution due to the election alone. Add in over six months straight of profits, and the environment is perfect for a major collapse and repeat of Black Thursday.
Looking back at past historical data referencing previous Bitcoin cycles and the impact presidential elections have had on them, there are some interesting correlations. For one, Bitcoin’s halving takes place every four years much like elections and is always on an election year, ensuring the cryptocurrency is primed to pump and building up steam.
The crypto asset has only existed for just over a decade, so this will be the third presidential election it will see since its inception. Presidential elections also appear to coincide with each bear market’s final breakout into a new bull market.
In fact, a bullish impulse begins before the election, likely due to halving-related price momentum increasing due to lowered supply. Still, the high-risk environment that takes place during Q4 of an election year keeps the cryptocurrency contained below the last monthly close where the prior all-time high was set.
However, right after the new President takes the oath of office early in the following year, Bitcoin finally retests its former all-time high and then never looks back. This scenario has now happened twice post-election – will the third time be the charm?
The first post-election breakout resulted in an over 7,000% increase, while the most recent breakout in 2017 led to an over 1500% rise and Bitcoin price reaching $20,000 – its current record.
The two ways to profit ahead of the presidential election with PrimeXBT
With Bitcoin expected to reach prices of $100,000 someday, that journey could be beginning now. However, with so much risk associated with such a significant United States presidential election, another selloff is likely expected during the final stretch of each candidate’s campaign and leading into November when the winner will be decided.
Along with the fate of the next US president being revealed that day, it could also signal a significant change in the finance world. Being on the right side of the trade could be incredibly profitable, but here are two strategies to consider: short Bitcoin ahead of the election to hedge against risk, or instead wait to get the right long entry and profit from Bitcoin’s next major uptrend.
As PrimeXBT research shows, past elections have acted as the catalyst that once past, leads bulls into a new parabolic rally and Bitcoin toward new all-time highs. If this happens again, the next dip related to reducing risk before the election could be the most lucrative opportunity to long Bitcoin in history. The award-winning advanced trading platform offers traders exposure to building a diverse trading portfolio of long and short positions across crypto, forex, stock indices, commodities, and more. Additional risk management tools are also included, along with technical analysis software to prepare your positions and take advantage of the volatility to come.