Election Impact and Economic Factors

TLDR

• Bitcoin’s price expected to benefit from US presidential election regardless of outcome
• Historical data shows strong Q4 performance for Bitcoin, especially in halving years
• Failure of both parties to address US debt and deficit issues seen as bullish for Bitcoin
• Federal Reserve’s potential interest rate cut could be positive for Bitcoin and risk-on assets
• Bitcoin’s “digital gold” narrative may attract more institutional capital amid market volatility

The upcoming United States presidential election and other economic factors are setting the stage for a potential Bitcoin rally in the fourth quarter of 2024, according to industry experts.

CK Zheng, chief investment officer of crypto hedge fund ZX Squared Capital, believes that Bitcoin’s price will benefit regardless of the election outcome.

Historically, Bitcoin has shown strong performance in the fourth quarter, with data from CoinGlass revealing that the cryptocurrency has rallied more than 50% six times since 2013.

This trend has been particularly pronounced in years when Bitcoin halving events occur, such as in 2020 when Bitcoin surged 168% in Q4.

The failure of both major US political parties to adequately address the country’s growing debt and deficit problems is seen as a bullish factor for Bitcoin. Zheng explains,

“As both Republican and Democratic parties do not appropriately address the ever-increasing US debts and deficits during this election, this will be very bullish for Bitcoin especially post the US election.”

Another potential catalyst for Bitcoin’s growth is the Federal Reserve’s monetary policy. Zheng suggests that an “aggressive” 50 basis point interest rate cut could be positive for Bitcoin and other risk-on assets if the US economy achieves a “soft landing.”

This refers to the central bank’s ability to control inflation without causing a significant economic downturn.

The best #Bitcoin performance after the halving always comes in Q4… pic.twitter.com/sLEdNqHcfj

— Crypto Rover (@rovercrc) September 28, 2024

The growing narrative of Bitcoin as “digital gold” and a hedge against macroeconomic instability is expected to attract more institutional capital.

Leo Fan, founder of Cysic, a zero-knowledge proof generation and verification layer 1, notes, “Liquidity is slowly being reintroduced into the market, which may set the stage for stronger price movements in the months ahead.”

However, some experts caution that price movements should not be the sole focus. Samantha Yap, CEO and founder of Web3 PR firm YAP, emphasizes the importance of retail interest and media attention that often follows Bitcoin rallies.

She states, “The hope for the crypto and Web3 space during these moments is that there are more usable and accessible applications ready for newcomers to adopt.”

The impact of the upcoming Bitcoin halving event in April 2024 is also expected to play a role in the cryptocurrency’s performance.

Halving events, which reduce the rate at which new bitcoins are created, have historically been associated with price increases.

Zheng anticipates that Bitcoin could reach a new all-time high in Q4 or soon after. However, he also notes that if the Federal Reserve achieves a soft landing, Bitcoin’s price may be highly correlated with the NASDAQ index.

As of the latest data, Bitcoin is trading at $64,400, experiencing a 2% decrease over the past 24 hours. Despite this short-term fluctuation, many industry observers remain optimistic about Bitcoin’s prospects in the coming months.