Crypto Awaits Volatility as US Election and Fed Decision Near

This week promises to be pivotal for financial markets, with high-stakes events poised to influence Bitcoin’s trajectory and broader market trends. Insights providers have flagged potential volatility as two major developments loom: the upcoming U.S. presidential election and the Federal Reserve’s highly anticipated interest rate decision. These events are expected to create waves that could shape market sentiment and investment strategies moving forward.

Voting for the presidential election begins on November 5. Results are also expected around November 6. In addition, the Federal Reserve is scheduled to announce its interest rate decision on November 7. The Chicago Mercantile Exchange (CME) shows a 99.7% probability of a 25 basis point rate cut. 

Election Trends and Market Response

Blockchain analytics platform Spot On Chain pointed out that market volatility typically spikes during major political events. Historical data suggests that post-election periods often signal the start of significant market rallies. This trend is particularly notable given the previous U.S. presidential election cycles. Spot On Chain argues similar patterns could be sparked by the upcoming election result, with Bitcoin’s price continuing its upward trend, regardless of whether Donald Trump or Kamala Harris take office.

Past Cycles as Indicators

Further, analyst Ali Martinez has noted the upward movement of Bitcoin after every U.S. presidential election. In 2012, Bitcoin started off from a very low base (around $12) and rose to hit highs by more than 10,640%. 

The 2016 election showed a pronounced and sudden spike in market activity. Following that period, Bitcoin, which had started the year in the hundreds, experienced a substantial increase, culminating at a peak of $18,970 by late 2017. This represented an impressive rise of about 2,698%.

This trend continued in 2020, with a major post election rally. When the cycle began, Bitcoin traded near $14,000, and by late 2021, it logged near $72,000, representing an increase of 386.07%. 

As financial markets brace for this critical week, the intersection of political and economic developments is set to play a decisive role in shaping future trends. While historical data and past election cycles suggest that Bitcoin could benefit from post-election rallies, market participants remain watchful of any deviations that could arise due to unique contemporary factors.