Policy, Polls and Politics...this week is sure to be a BIG one! Between the upcoming US Elections and the Federal Reserve monetary policy meeting soon after, it’s going to be an action-packed week to say the least. Whether you’re rooting for the Democrats, Republicans or just spectating with a bucket of popcorn in-hand for sheer entertainment purposes observing the spectacle that is sure to play out over the next few days, it’s undeniable to underestimate the impact this election will have on the broader traditional markets and Cryptocurrency alike. Compounding another potential FED rate cut on top of all this by the later part of the week means there will surely be a lot of volatility in the markets. Let’s take a look at how we can navigate these enigmatic waters, primarily starting with Bitcoin as it’s done some interesting price action since our last analysis.
I’m pleased to announce that the wait is over – the BTC Bull Flag is finally complete! Through the last nine months we’ve managed to birth quite the technical play. Coming out of this prolonged accumulation phase, we’ve seen Bitcoin quickly soar back up to a whopping $73,600 USD, giving us a monster rally equating to a near $7,000 gain for the month of October. This has consequently popped us out of the top of the Bull Flag accumulation pattern we’ve been eyeing and writing about since earlier this year – to the Bulls; congratulations, your patience has been rewarded.
A clearer view of the above chart can be found here: https://www.tradingview.com/x/Up4AwQhW/
As you can also see, the current price after breaking out and since retraced on the daily
timeframe back down the $67,000 - $68,000 range. This is actually a positive and healthy sign as it allows for stable growth later by ensuring that price currently retests the breakout here; meaning that price by progressing slowly and ensuring all price supports are being tested along the way up now, this will in-fact help mitigate the risks of wild and spontaneous volatile swings back down to these current levels once continue to keep climbing higher in subsequent months. Whilst Cryptocurrency will always be volatile compared to traditional asset classes, the healthier price growth you have, the more stable the gains will be later on down the road in any bull market cycle. Now with fresh new All Time High horizons in sight, the next more immediate potential take profit target I’m personally eyeing would be an eye-watering $102,147 USD. We can determine this number using Fibonacci extensions and applying it to the previous market cycle in order to ascertain future levels for this current cycle. This first stop along the way at approximately $100K makes sense from a psychological perspective given that it’s a strong take profit target that many would’ve had in their minds for those who’ve been long standing market participants well before this current cycle.
A clearer view of the above chart can be found here: https://www.tradingview.com/x/jDhO4ypm/
This would make for nice headlines, further lending credibility to bystanders that Bitcoin and the broader Cryptocurrency industry is here to stay, and that those without allocation already probably shouldn’t wait any longer to diversify into a tokenized digital asset based long-term strategy.
Historically, while October has always been a volatile month for Cryptocurrency with this year being no exception and now with the US Elections around the corner over the next few days, we’d likely expect to see significantly more volatility coming into the markets and bolster liquidity so that the momentum can remain in the following months hereafter. With that being said, all of the focus now will be on who actually wins the Election – because that will make or break the market right? What if I told you that in the end it doesn’t even matter?
Most market participants who were around at the time will remember that in the wake of the 2016 US Elections, the surprising Trump win did in-fact help pave the way for a strong focus on market growth as it gave optimism and hope to that market that the economy would once again become “great”. This led to historic growth in traditional assets and Cryptocurrency alike during the vast majority of 2017, where for our industry the notion of an ICO was birthed and Bitcoin from January of that year climbed all the way from a mere $966 - all the way to a staggering $20,000 All Time High price by December that very same year. This equated to a mind-blowing 1,928% increase in valuation for Bitcoin and saw the first significant rise and true creation of the “Altcoin” market as those who felt like they already missed the boat with Bitcoin also felt they could proverbially “get a second chance” for the elusive moonshot opportunity. Given the last few years of disastrous economic policy under the Biden Administration for US residents, it’s not far-fetched to think that many will vote for Trump again regardless of individual political beliefs as people tend to vote with their wallet; and if that wallet’s hurting, they’re likely to accept something they previously thought as less-than-ideal in order to circumvent and appease the issue. This sort of capitulatory thinking is why I believe people will be driven to the polls like never seen before in this Election cycle and with Trump currently being the favorite for obvious reasons, I wouldn’t be surprised to see that aforementioned market optimism come back with a fiery appetite for more growth once again.
Interestingly enough however, if we look at previous cycles we will see that in the long-run, the current day politics don’t ultimately dictate the overall direction and outcome that our industry is heading in. Whether it’s a Democrat or Republican who takes the White House and whomever is sitting in that chair in the Oval office is subject to much other much larger governing agencies, interests and policy-making institutions that the US finds itself beholden too. All the while, Bitcoin with its inherit diminishing supply pool via Halving cycles every four years baked into its code demonstrates that scarcity of any asset class will “trump” all in the long run when you have perpetual inflation and prolonged currency expansion programs such as “Quantitative Easing” being propagated by Central Banks globally. By overlaying previous US Election cycles over a long-term Bitcoin Chart; it’s clear to see there’s only one direction we’ve been heading overall – and that’s up.
Whilst history may not always repeat, it sure does rhyme. Just like how when Bitcoin in the previous 2020-2021 market cycle was ready to break the $20,000 All Time High barrier, we also had further monetary policy easing from the FED, just like we currently have now, therefore likely aiding continued growth in assets and price appreciation. As we come to the later part of the week, by early Friday morning AEST we will have confirmation from the FED on the next round of Monetary Policy, deciding whether they cut rates by a further 25 basis points or leave them on hold. Currently the market is pricing in a forecasted 0.25% reduction off the Federal Funds Rate, coming off the back of the 50 basis-point cut in September this year.
Not only will we have the US making an interest rate decision, but today we also had our very own RBA make an interest rate decision deciding to leave the Cash Rate unchanged at 4.35% for the time being. This indicates that while the US economy has been somewhat more successful in reducing CPI inflation in the short term, the Australian economy still has some in-roads to make before it can start cutting rates safely without inducing a premature 2nd wave of the cost-of-living crisis currently weighing on our fellow Aussies.
While everyone is waiting with bated breath on how the US Election will turn out; whether Kamala Harris manages to claw back her way from the brink of some unfortunate recent PR disasters or if Donald Trump once again seizes the day in triumph, it will surely be a spectacle – not only to see how the US responds to their newly elect, but how the market will respond as well. Volatility is sure to be rife, plaguing both Bulls and Bears whom are intra-day trading until we have the final results. Alas, it’s prudent to remind ourselves that a charismatic politician won’t make or break the Cryptocurrency industry, that instead always comes back to the recklessness of Government fiscal and monetary Policy; being the very reason Bitcoin was created in the first place. Therefore, while I’d like to emphatically profess “Make Bitcoin Great Again!” The reality is that it always has been. It’s provided an unparalleled store of wealth for market participants for well over a decade. If you see that the Government aren’t going to save you, then you’ll likely also see that you need to do that yourself through achieving financial freedom. That’s when real greatness ensues. Here at Stormrake, we’ll help you navigate this Election cycle, and help you keep making your portfolio great (again!) as we’ve already done so for many!
Written by James Ryan
Create a brokerage account today
Reach out to us at Stormrake for further market insight and allow us to help you navigate the sea of mania and laser-eye memes, so that you can realise your goals in the market!
No Advice Warning
The information in this newsletter is general only. It should not be taken as constituting professional advice from the author - Stormrake PTY LTD.
Stormrake is not a financial adviser and does not provide financial product advice. You should consider seeking independent legal, financial, taxation or other advice to check how the information relates to your unique circumstances. Stormrake is not liable for any loss caused, whether due to negligence or otherwise arising from the use of, or reliance on, the information provided directly or indirectly, by this newsletter.
Disclaimer
All statements made in this newsletter are made in good faith and we believe they are accurate and reliable. Stormrake does not give any warranty as to the accuracy, reliability or completeness of information that is contained here, except insofar as any liability under statute cannot be excluded. Stormrake, its directors, employees and their representatives do not accept any liability for any error or omission in this newsletter or for any resulting loss or damage suffered by the recipient or any other person. Unless otherwise specified, copyright of information provided in this newsletter is owned by Stormrake. You may not alter or modify this information in any way, including the removal of this copyright notice.Copyright © 2024 Stormrake Pty Ltd, All rights reserved
