Bitcoin set for potential post-election surge amid US investor hesitance – CryptoQuant

Bitcoin’s present valuation closely mirrors its price points prior to the last two US elections, indicating that the cryptocurrency may be set for an upswing if a beneficial post-election trigger emerges, as per CryptoQuant’s recent analysis.

Historically, Bitcoin has experienced significant increases following US presidential elections, achieving notable gains by the conclusion of each election year — 98% in 2020, 37% in 2016, and 22% in 2012.

As of 2024, Bitcoin is assessed to be fairly valued at approximately $67,000, slightly above the “realized price,” which represents the average cost basis for all current holders, signaling healthy demand and potential for further price appreciation.

In recent months, demand for Bitcoin has surged significantly, increasing at a rate of 248,000 BTC per month, the fastest since April. However, despite the global demand rise, there is a disconnect among US investors, who seem to be missing out on this growth wave.

The negative Coinbase premium — indicating lower US demand relative to global trends — has consistently remained in the negative since early October, suggesting that American buyers are exercising caution.

Profit-taking and reduced leverage

CryptoQuant’s findings revealed that while Bitcoin prices recently escalated from $60,000 to $73,000, the surge was swiftly moderated by profit-taking, resulting in a correction rather than speculative accumulation.

This price decline was not due to new short positions but was driven by traders who chose to secure profits following a 20% price rise from early October. This trend of profit-taking resulted in a substantial decrease in open interest in Bitcoin futures markets, eliminating around $4 billion in leveraged positions.

This suggests that traders are bracing for potential volatility following the US election, opting to reduce risk in their positions rather than extend into new long trades.

Exchange activity further corroborates this cautious stance. Daily Bitcoin inflows into exchanges currently total 45,000 BTC — significantly lower than the 2024 peak of 95,000 BTC recorded in March and the 73,000 BTC inflow rate prior to the 2020 election.

Decreased inflows are typically interpreted as a sign of diminished selling pressure, indicating that the recent price decline may not reflect broader market weakness but rather a strategic reallocation by investors. The report suggested that this conservative approach may persist unless American interest is rekindled, which could serve as a stabilizing influence in the market.

Growing demand outside the US

The report highlighted that demand for Bitcoin outside the US remains robust, fueled by a combination of institutional and retail investors taking advantage of Bitcoin’s status as a hedge against macroeconomic uncertainties.

International buyers seem to be sustaining bullish momentum, which CryptoQuant attributed to economic concerns beyond the US, including elevated inflation rates and currency devaluation pressures in various global regions.

This trend sharply contrasts with US investor sentiment, where the ongoing negative Coinbase premium underscores a persistent reluctance to enter or expand Bitcoin holdings at current price levels.

The report stressed that American investor engagement, often gauged through the Coinbase premium, has historically indicated the potential for sustained rallies when positive.

However, with the premium remaining negative, it suggests US investors are either taking a wait-and-see approach ahead of the election or are discouraged by ongoing regulatory uncertainties surrounding crypto markets.

The report indicated that any post-election policy changes or market-moving events in the US could potentially affect this stance, possibly shifting the Coinbase premium into positive territory and triggering a more sustained rally.

In the interim, market conditions remain mixed. While Bitcoin’s fundamentals are strong and in line with previous election cycles, a complete rally may necessitate a shift in American sentiment. The report concluded that without this shift, Bitcoin’s potential growth may largely hinge on sustained international demand and favorable external economic conditions.

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