How high can Bitcoin price go in the run-up to the US election?
2024.08.21 04:03
Bitcoin (BTC) may have reached a local bottom during the global market rout on Aug. 5, when its price dipped to a six-month low of approximately $49,500.
This potential bottom aligns with historical patterns observed in previous US election years, where Bitcoin has consistently found its local low in the third quarter, typically around July or August.
Can Bitcoin hit a new record high before the election?
Technical analyst SuperBro highlighted that Bitcoin’s third-quarter bottoms in 2012, 2016, and 2020 followed strong upward momentum, often leading to price rallies to new record highs after the US presidential elections.
Bitcoin price performances in the third quarter of US election years. Source: SuperBro
Given this historical precedent, there is growing anticipation that Bitcoin may resume its uptrend as it approaches the November 2024 election, which features a high-stakes contest between Donald Trump and Kamala Harris.
SuperBro bolstered his bullish outlook for Bitcoin by referencing the “left-translated cycle” theory. This theory posits that Bitcoin’s bullish cycles are beginning earlier and potentially reaching their peaks sooner than in previous cycles.
Source: X
Key evidence supporting this theory is that Bitcoin’s most recent peak occurred a month before its fourth halving in April 2024. This is unusual compared to past cycles, where the peak typically followed the halving event.
If the left-translated cycle holds, Bitcoin could begin its ascent before traditional market participants expect, probably hitting a new record high ahead of the election. This could catch off guard the “mid curve” — or those who are slower to adapt to changing market dynamics.
As a result, these investors might be sidelined if they wait too long, missing out on the rally’s initial stages.
Fundamentally, Trump’s positive stance on Bitcoin and potential regulatory changes under different administrations could fuel speculative buying, leading to accelerated price increases.
According to the crypto betting service Polymarket, Trump’s winning odds have improved.
Bitcoin onchain data signals less profit-taking
Long-term holders (LTHs) of Bitcoin have consistently locked in about $138 million in profit per day during the recent flat trend, according to Glassnode’s latest weekly report.
Bitcoin LTH net realized profit/loss. Source: Glassnode
This steady profit-taking suggests that a significant amount of capital is entering the market daily to absorb this selling pressure, keeping Bitcoin’s price relatively stable despite the choppy environment.
Meanwhile, the Realized Profit/Loss Ratio remains elevated but shows signs of a significant decline from its peak, indicating that LTHs are beginning to reduce their profit-taking activities.
Bitcoin LTH realized profit/loss ratio. Source: Glassnode
Historically, this metric reaches high levels during market tops and declines before the market resumes an uptrend, as seen in the 2013 and 2021 cycles.
The combination of this declining Realized Profit/Loss Ratio and historical patterns of LTH behavior suggests that Bitcoin might be able to rally in the months leading up to the election.
Bitcoin bull flag points to $80,000
From a technical perspective, Bitcoin may undergo a bull flag breakout in the run-up to the US presidential election.
BTC’s price has been trending inside a bull flag pattern since March, confirmed by its correction inside a descending parallel channel, which, in turn, has followed a strong uptrend.
BLX weekly price chart. Source: TradingView
As a rule, this formation increases Bitcoin’s likelihood of continuing its bullish momentum, given that its price breaks decisively above the flag’s upper trendline. Should it happen, its bull flag breakout target will be measured by adding the previous uptrend’s height to the breakout point.
Related: 2 key Bitcoin metrics signal steady bull cycle — ‘No bubble’ in sight
That brings Bitcoin’s bull flag target to around $80,000 by the US election in November.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
