The article is reprinted from: Ares, Golden Finance
On October 29, BTC returned above $71,500, setting a new high since June 7 of this year, and showing strong momentum to surpass the previous historical peak of $73,777.
At the same time, the total market capitalization of cryptocurrencies also rebounded, breaking through $2.5 trillion. Many analysis institutions believe that the biggest driving force behind the hot market is Trump's victory, but there is still about a week until the final results of the U.S. election are announced, and it remains uncertain who will prevail. From the current financial market response, the "Trump trade" is very evident, but investors still need to be wary of potential market risks.
1. The U.S. election is imminent; who will laugh last?
The Bitfinex Alpha report shows that Bitcoin's volatility has increased, with election factors being a key influence. Driven by geopolitical factors and Trump's election trade, Bitcoin rebounded after a 6.2% fluctuation last week. The expectations surrounding the election have led to active options trading, and the implied volatility after election day could reach 100% daily. However, despite the increase in short-term volatility, Bitcoin has risen 30% since the September low, reaching over $71,500 at the time of writing.
From a data perspective, Deribit data shows that the number of Bitcoin call options expiring on November 8 is twice that of put options.
Currently, the probability of Trump winning the U.S. presidential election on the prediction market Polymarket has risen to 66.3%, while the probability of Harris winning has dropped to 33.7%, with Trump leading by 32.6 percentage points.
Recently, Trump's polling support has also surpassed Harris for the first time since early August.
The average poll data from RealClearPolitics as of October 28 shows that Trump has a slight advantage over Harris by 0.2 percentage points. Their support rates are 48.6% and 48.4%, respectively. As of October 23, Harris was still leading Trump with 49.1% to 48.5%.
Additionally, according to results published by Florida State University, over 43.3 million American citizens have already voted early in the presidential election scheduled for November 5. With little time left before the election, unless a significant "October surprise" occurs, the main tone in the final stages of the election will likely remain tense.
However, the "Trump trade" in the financial market is already very evident, especially in the cryptocurrency market, where BTC has taken the lead by surpassing $71,500.
On October 29, the three major U.S. stock indices collectively closed higher, and cryptocurrency concept stocks rose broadly, with MARA Holdings up 11%, Riot Platforms nearly 10%, and MicroStrategy nearly 9%. Additionally, Trump Media Technology Group (DJT.O) surged by 21.6%.
In the crypto space, Trump-themed meme coins saw widespread gains. The Trump family's crypto project, World Liberty Financial (WLFI), also announced plans to issue a stablecoin.
At the same time, legendary analyst Martin Armstrong predicts that Trump will win by a landslide, stating that Harris's real support rate has "actually dropped to 6.5% to 7.5%." The Democratic Party's "deep state" has entered panic mode.
In trading, large funds are also betting on Trump. On October 29, a whale invested another 1 million USDC betting on Trump's victory in the U.S. election. Over the past four days, this whale has spent 5 million USDC to purchase 7.54 million shares betting on Trump's win.
2. A historic week: Bullish and bearish views clash
Currently, Bitcoin has returned above $70,000, just $2,000 away from its historical peak. Many investors generally expect that the price will break the previous high before the U.S. election and set a new record. However, some opposing institutional views believe that there are still many uncertainties in the current market, especially that the market may face a correction after the election.
1. Stable bullish outlook
Bloomberg ETF analysts: The listing applications for SOL and XRP ETFs are "bullish options on Trump's victory." Additionally, if Trump wins… he will definitely appoint a more liberal SEC chairman.
Arthur Hayes: The family office Maelstrom has invested 5% of its funds in USDe, maintaining a large long position in cryptocurrencies. They are using Ethena Lab's USDe stablecoin to hedge against uncertainty while maintaining significant bullish bets on Bitcoin, Ethereum, and other cryptocurrencies.
Matrixport: The U.S. election may become a key catalyst for the crypto market. South Korea is known for its active altcoin trading, but current trading volumes remain sluggish, making a significant rebound in altcoins unlikely. Bitcoin's funding rate has historically aligned with South Korean trading volume trends, and higher funding rates typically attract hedge funds to buy ETFs to profit from the spread.
However, currently, Bitcoin's funding rate, South Korean trading volume, and the purchase volume of Bitcoin spot ETFs are all below the levels seen in March 2024. Next week's U.S. presidential election may become a key catalyst to ignite new market momentum.
Trader Eugene: The market will continue to rise after the election, with a positive outlook on Solana, as speculative long positions in October have largely been wiped out.
DWF Labs co-founder: The next two quarters will be a bullish cycle; the market remains unstable but the overall direction is positive. October (Uptober) is the first month of the bullish cycle from Q4 2024 to Q1 2025. The market is still very unstable, but the direction is positive.
As an active player, BlackRock has purchased an additional 34,085 Bitcoins worth about $2.3 billion in the past two weeks alone. The company currently holds over 400,000 Bitcoins, valued at nearly $26.98 billion.
2. Bearish: A potential sell-off after the election
Temasek International's Chief Investment Officer: If Trump returns to the White House, it may not have a positive impact on the global economy and financial markets. He pointed out that Trump's policies would lead to a slowdown in global economic growth, which would ultimately affect U.S. businesses. He also warned that higher interest rates and a stronger dollar would adversely affect emerging markets.
Nomura: If a "Harris election deadlock/congressional split" occurs, various assets could face reversal risks, with some U.S. Treasury bonds and short-term interest rates having upward potential, as well as risks of unwinding bets on Trump sweeping "economic overheating" regulatory relaxation stocks; under the "Harris deadlock" trade, gold/cryptocurrency would be squeezed; if the Democrats achieve a blue sweep in Congress, the stock market could fall by 7-10% in the next one to three months.
Columbia Business School professor: Trump's presidency could have a "bearish" impact on Memecoins, as they represent a form of "economic populism and a statement against unfairness." U.S. regulations are unfavorable to Memecoins, and most people have lost money on them.
Greeks.live macro researcher: The market's attention to this U.S. election is lower than expected, and Friday's non-farm payroll and unemployment rate data are worth noting as the last important economic data before the election, with almost no speaking arrangements for Federal Reserve officials. As the election approaches, the market's focus on this election is lower than expected, but there is still strong uncertainty.
"Federal Reserve mouthpiece": The U.S. may face new inflation risks after the election. The Federal Reserve's two-and-a-half-year battle against inflation seems to have succeeded, but the U.S. election could change that. Both candidates support policies that promote economic growth, which may prevent inflation from declining further. However, economists and even conservative advisors worry that Trump's supported views are particularly likely to ignite inflationary pressures. This includes his proposals for comprehensive tariffs on imports, expelling workers, and relying on the Federal Reserve to lower interest rates.
Overall, these policies trend towards inflation. Trump's proposals could lead him into a new conflict with the Federal Reserve, whose task is to maintain low inflation. Any factors that reignite inflation could lead officials to slow down or even halt interest rate cuts.
Economist Peter Schiff: Bitcoin may fall due to a "Trump sell-off." As Trump's support rises, Bitcoin has not followed the upward trend of other Trump-related assets, possibly because speculators have already bought in advance, leading to weakened demand. He predicts that Bitcoin may face a "Trump sell-off" and believes that under inflationary pressure, gold's safe-haven advantage is becoming more pronounced, entering a bull market.
Tyr Capital's Chief Investment Officer: Bitcoin may face selling pressure after the U.S. election. Bitcoin's price may rise significantly before the November 5 U.S. election, but after the election results are announced, there may be selling pressure due to profit-taking.
International Monetary Fund (IMF): The world faces risks of low growth and high debt. There is a danger of falling into a path of low growth and high debt, which will reduce the resources available for governments to improve the lives of their people, address climate change, and tackle other challenges.
The upcoming U.S. presidential election on November 5 raises concerns that Americans, stimulated by high inflation during President Biden's administration, may bring Republican candidate Trump back to the White House, ushering in a new era of trade protectionism and potentially adding trillions of dollars to U.S. debt.
Summary
From the current cryptocurrency market situation, BTC is just a step away from its historical high. With the U.S. election approaching, expectations of Trump's victory are also driving the cryptocurrency market higher. Therefore, based on the current financial market and various signs, the probability of Trump's victory appears high. However, with a week remaining until the election results and the economic situation being volatile, investors should remain cautious of market volatility risks while being optimistic about the start of a new bull market.
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