US Election vs. Fed Rate Cut — 5 Things to Know About Bitcoin This Week

Bitcoin (BTC) is heading into the US presidential election week at $69,000 and a new all-time high.

• A wide order book and increased liquidity marked the start of an amazing week for Bitcoin traders.
• Election Day is almost here, and so are warnings about “news-selling” events once the results are in.
• The Federal Reserve’s interest rate decision is expected in just two days, providing another catalyst for cryptocurrency volatility.
• Bitcoin market capitalization dominance has reached its highest level in three and a half years following a major monthly close.
• Bitcoin network fundamentals are poised to hit new all-time highs throughout the week.

BTC price struggles with old resistance.

Bitcoin’s continued decline against last week’s $73,500 liquidation bid thwarted its strong performance throughout the weekend.

BTC/USD found itself below $67,500 at the end of the week, managing only a slight bounce before momentum ran out, according to data from Cointelegraph Markets Pro and TradingView.

Now, with the U.S. presidential election approaching, volatility is almost guaranteed.

“There are currently two clear areas of market liquidity and order book depth,” popular trader Skew wrote in a recent analysis of X.

“$67K – $65K: Bid Liquidity and Bid Depth $73K +: Ask Liquidity and Ask Depth.”

Skewness predicts that sharp movements between last week’s lows and highs could occur without warning.

“Going forward, how this market trades will be very important, especially around areas of market liquidity,” he concluded.

“Given the wide order book, it is very easy to influence the price and volatility between $66K and $73K.”

Others suggested that another tap of all-time highs could be ahead of a deeper BTC price correction, with popular trader and analyst Credible Crypto looking at what could come next.

“The low period is very constructive. $BTC appears to be forming a bottom here for a push towards ATH,” he told X followers.

Data from monitoring resource CoinGlass shows order book bid liquidity increasing to more than $67,000 in the new week.

Starting in 2021, a familiar resistance level remains in the headline $69,000.

Election Sparks Bitcoin’s “Sell the News” Warning

The 2024 US presidential election is approaching. Regardless of the outcome, cryptocurrency and risk asset traders expect fireworks.

Market volatility is expected to move up and down in the coming days.

As Bitcoin gives hodlers a preview of what will happen over the weekend, Skew said the environment is reminiscent of major macro events of the past.

Analyzing perpetual swaps, he told his

“Underweight positioning and over-hedging markets are things to watch in terms of the next predatory move. “Markets seek liquidity on large events.”

In another post, Skew acknowledged that the Bitcoin market was “looking healthier” than it had been last week while hitting near all-time highs.

“Until the results of the US election are known, it is likely to be a taker-dominated market,” he continued.

“A slight improvement in market prices ahead of early trading will require continued spot premiums and spot bids to sustain prices.”

Meanwhile, trading firm QCP Capital has some bad news for short-term BTC speculators. The latest bulletin board for Telegram channel subscribers predicted a sell-off after the November 5 election.

“While Trump is favored to be the next POTUS, bets on Trump have declined significantly from 66% for Polymarket to 57% for Trump and 43% for Harris,” he said of the election odds over the weekend.

“Regardless of the outcome, we believe this election will be another news-selling exercise replicating the Nashville Bitcoin Conference.”

FOMC meeting comes at a critical moment for DXY

Aside from the election, this week marks another key macroeconomic date in the diaries of cryptocurrency traders: the Federal Reserve interest rate decision.

The next meeting of the Federal Open Market Committee (FOMC) on November 7 will provide a full picture of how the Fed will deal with conflicting inflation factors.

As Cointelegraph reported, this came in the form of an overshoot in inflation gauges combined with tepid employment. Last week’s non-farm payrolls data came in well below expectations, and figures for the previous two months were also revised downward.

“The Federal Reserve has made clear that maintaining a strong labor market takes precedence over fighting inflation,” trading company Mosaic Asset said in the latest issue of its regular newsletter, “The Market Mosaic,” published on November 3.

Markets expect a rate cut of 0.25% at the FOMC meeting, according to data from the CME Group FedWatch tool.

With volatility expected in risk assets throughout the week, Mosaic looked to the VIX Volatility Index and the US Dollar Index (DXY) for clues.

“The reaction to the election could lead to DXY collapsing or collapsing,” he summarized.

“If the dollar meets resistance and turns lower, we believe this will support risk assets in the near term.”

DXY stands at 103.82 at the time of writing, trying to maintain the rebound that began in earnest in early October.

Bitcoin dominance has reached classic reversal territory.

Bitcoin’s share of the overall cryptocurrency market capitalization has recently reached and remains at key psychological levels.

On October 29, Bitcoin market dominance surpassed 60% for the first time since April 2021.

The performance has not gone unnoticed, as traders tend to equate strong Bitcoin with underperforming altcoins until the trend changes.

“Bitcoin dominance is currently around 60.51%, keeping BTC prices in the 68,000-70,000 range, while altcoins are down 20-40% from recent highs.” analyst Cryptorphic wrote in an X post on this topic on November 4.

“This pattern is common in bull markets because as BTC dominance rises, altcoins typically fall. In my experience, a rejection zone between 64% and 65.81% can trigger an altcoin rally while BTC hits new all-time highs and moves sideways.”

Popular commentator MartyParty suggested that Bitcoin dominance could see a significant downward trend in line with the previous halving year. A chart uploaded to X calculated that dominance began to decline 224 days after each halving event.

Counter-arguments during the subsequent discussion included the existence of spot Bitcoin exchange-traded funds (ETFs) supporting BTC demand and the overall lack of interest in the cryptocurrency among retail investors.

Popular trader and analyst Rekt Capital noted that in terms of macro price trends, Dominance recorded a noticeably strong monthly close.

“This is a historic monthly close for Bitcoin dominance,” he summarized on November 1.

“The last time BTC Dominance closed like this in a macro uptrend was in early 2019. It’s been over 5 years already.”

Difficulty and hash rate broke records.

Bitcoin difficulty is due to headline network fundamentals hitting record highs this week.

relevant: Bitcoin appears capable of a rebound, as do ETH, DOGE, LTC, and XMR.

According to the latest estimates from mining pool CloverPool (formerly BTC.com), the difficulty is expected to increase by 5.1% at the next automatic rebalancing on November 5. It will exceed 100 trillion for the first time.

So, as the Bitcoin mining sector emerges from the recent halving, mining difficulty joins hashrate in exploring new territory.

Meanwhile, mining-related BTC price indicators are busy hitting new all-time highs.

As noted by Charles Edwards, founder of Capriole Investments, a quantitative Bitcoin and digital asset fund, the Bitcoin Energy Value Chart is set to hit six figures.

“Bitcoin Energy Value (the raw joule value of Bitcoin) has surpassed $100,000 for the first time ever,” he said last week.

This article does not contain investment advice or recommendations. All investment and trading activities involve risk and readers should conduct their own research when making any decisions.