The price of Bitcoin rose 2% in 30 minutes as the election caused great volatility in the US stock market.
High on Election Day? 4 reasons why Bitcoin rose 2% in 30 minutesMARKETER ANALYSIS
The price of Bitcoin (BTC) rose 2% in just 30 minutes as the US stock market rang its opening bell on November 3. During the Bitcoin Pro scam pre-market period, the Dow Jones rose by more than 350 points on the day the US elections triggered massive volatility.
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The four reasons that probably led to an upward trend in Bitcoin in such a short period are the election, the increase in stocks, negative financing and the increase in exchanges outflows.
The election is positive for Bitcoin for two reasons. First, a Biden or Trump victory would benefit BTC in the short term, according to industry figures.
Crypto derivatives volume more than triples spot trades
Tyler Winklevoss, CEO of the Bitcoin Gemini exchange, said:
„Both political parties are addicted to the Fed money printer, so no matter who wins the election, the only real long-term winner will be #Bitcoin.
Tom Lee of Fundstrat Global Advisors said the shares could go up 10 percent with a Biden victory. In that case, the risky assets would likely recover, benefiting Bitcoin. But if Trump wins, Lee said the shares could rise even higher by 15 to 17 percent.
Meanwhile, Goldman Sachs issued a note earlier this month suggesting that „a blue wave would likely lead us to update our forecasts. Although experts are divided on the potential impact of the election on the stock market, it appears that both scenarios would be beneficial to the BTC later this year.
US stock market recovery coincides with BTC recovery
As Dow Jones saw a 350-point pre-market increase, BTC’s price rose from about $13,500 to $13,730 in 30 minutes.
Although Bitcoin has shown a declining correlation with US stocks in recent weeks, during an upward trend, BTC and stocks should rise together. Although Bitcoin is seen as a store of value, both BTC and stocks are still risky assets.
A rising stock market may mean that the markets are ambivalent about the eventual winner of the election.
Sellers caught off guard
When the Bitcoin abrupt increase occurred, the BTC Futures funding rate at Binance Futures was below 0%.
The crypto-currency futures exchanges implement a mechanism called „financing“, which encourages the minority in the market. If the number of sellers is greater than that of long-term buyers or holders, sellers will have to pay fees to buyers every eight hours.
But when the price of Bitcoin rises and there is also an additional incentive to buy BTC, a small squeeze may occur. Considering that BTC has increased by 2% in less than an hour, the dominant cryptomeda has seen a big squeeze in sales.
Exits from exchanges are increasing
According to data from CryptoQuant, an on-chain market analysis firm, exchanges outflows registered the highest peak this year, around 30,000 BTC.
Bitcoin exchanges outlets. Source: CryptoQuant
Traders deposit Bitcoin in exchanges when they want to sell their assets. Therefore, when capital flows out of exchanges, it means that traders, whales and retail investors intend to hold their BTC assets for an extended period.
The combination of price squeeze factors, electoral uncertainty, an uptrend in the stock market and rising foreign exchange outflows have contributed to the sudden rise in BTC prices.