Bitcoin prepares for battle at the beginning of a Democratic transition in the United States and with the coronavirus spreading lockdowns elsewhere.
Bitcoin (BTC) is beginning what is likely to be a busy week for the markets as the United States begins its two-month presidential transition.
Bitcoin continues to rise and reaches a new record price of $15,950 in 2020.
After Joe Biden was declared the likely winner of the U.S. presidential elections over the weekend, Bitcoin fell, but managed to avoid major losses – what next?
The Cointelegraph analyzes the factors that should influence BTC’s price activity next week.
US electoral frenzy begins to hurt
Attention remains firmly fixed in Washington as the outcome of a highly controversial election begins to unfold.
Experts warned that market volatility was by no means guaranteed after the result was released. As this occurred over the weekend, the opening of Wall Street on Monday is a source of interest for market participants.
Bitcoin has last major hurdle before facing a maximum of $20,000
Until the moment of writing this article, Japan was leading the gains, with its stock market reaching the highest in 29 years in what the press is calling the „Biden jump“.
Bitcoin, on the other hand, stopped before continuing last week’s gains and reached US$ 14,400 – US$ 1,590 below its recent peak. Since then, the BTC/USD has recovered considerably, turning around US$ 15,250 at the time of writing on Monday.
BTC/USD daily chart.
Acting President Donald Trump has pledged to challenge the vote count and may still cause more problems for Biden, leading to confusion over policy, which could still shake market sentiment.
Removing the lens, however, analysts often argue that in the long run, Bitcoin and gold as protective assets will ultimately win the election, regardless of which candidate leads the US in the future. The reason, among other things, is inflation.
As the Cointelegraph reported last week, a speech by Jerome Powell, president of the Federal Reserve, called for more financial stimulus to enter the U.S. economy, increasing debt and degrading the dollar.
„Bitcoin is the dominant crypto network – designed to host the ideal protection asset and preserve monetary power for long periods of time without loss of power,“ summarized Michael Saylor, CEO of MicroStrategy, in a tweet on Monday.
„This makes #BTC the solution to all investors‘ value reserve problem. Few understand. ”
Coronavirus chaos strangles Europe
Accompanying the electoral repercussions is the continuing turbulence in the management of Coronavirus by nation states.
Europe and the US have recently diverged on this issue, with the former succumbing to a wave of new lockdown measures that have met with considerable resistance from the population.
After showing optimistic recovery statistics for the third quarter, many governments will soon draw another, absolutely less interesting picture of their economies for the fourth quarter as economic activity plunges for the second time in 2020.
This opens up the possibility of history repeating itself for the Bitcoiners. After the asset crash in March and the first lockdowns, the Bitcoin recovered from $3,600 to a five-digit circle in less than two months.
While the governments themselves repeated the controversial responses to the virus, analysts already predicted a strong year for Bitcoin in 2021. Among them, as reported by Cointelegraph, Real Vision CEO Raoul Pal and Gemini fellowship co-founder Tyler Winklevoss predicted a new all-time record for BTC in the first quarter of next year.
Fear & Greed Index reaches dangerous zone
In terms of current investor sentiment, however, warning signs are ringing as Bitcoin remains above $15,000.
According to the Crypto Fear & Greed Index, which measures market sentiment using a basket of factors, a correction is more than overdue.
Compiled as a score of 100, the Index reached its highest reading since June 2019 on Monday – the moment Bitcoin circulated its annual highs of $13,800.
For comparison, two weeks ago the Index measured below 60 – firmly ’neutral‘ territory – before the last price rose the sentiment.
The closer the score is to 100, the more likely it is that the market will correct itself thanks to a wave of sales, pulling the price down.
Historical Crypto Fear & Greed Index chart. Source: Alt