Bitcoin Price Today Drops to $67K Amid Cooling Crypto Rally, U.S. Elections Take Center Stage
Bitcoin Falters on U.S. Election Uncertainty
Bitcoin, the world’s most valuable cryptocurrency, fell on Tuesday from its recent highs in a shift in market sentiment. After hitting nearly $69,000 as a high on Monday, Bitcoin dropped 2.4% to $67,412.5 by 00:49 ET (04:49 GMT).
There are a number of reasons for this decline: it might be related to the larger market risk aversion ahead of the U.S. presidential elections, a stronger dollar, or rising demand for safe-haven assets like gold.
Election Fears Keep Bitcoin and Crypto Markets on Tenterhooks
The cryptocurrency markets are pretty sensitive to the political atmosphere, especially this year’s presidential election of the United States in 2024. The anticipation of who might win has characterized the volatility in this crypto market.
Initially, their speculative outlook favored the victory of Donald Trump because he had shown progressive stances regarding cryptocurrencies. As Trump’s prospects of winning seemed to be increasing, the price of cryptocurrencies started moving up, along with Bitcoin hitting its temporary peak at $69,000.
And the assumption is that with Trump’s victory came easier regulations for the cryptocurrency space.
However, the latest surveys reveal that Trump is now neck and neck with Vice President Kamala Harris, leaving the markets in an uncertain situation. The fact that the latter has given some statements in support of regulations for crypto assets also provided some degree of optimism, although she loses on other performance measures.
Overall, the risk aversion trend has prevailed. Investors are not comfortable holding risk-driven assets like cryptocurrencies during political uncertainty, especially when a presidential election is so close that it might bring policy reversals.
Now, analysts see the 2024 US presidential race as too close to call, and that’s part of what’s fueling broader market jitters.
With only a couple of weeks to go before the actual vote, prediction markets like Polymarket continue to price Trump as a 63.7% winner compared to Harris at 36.4%.
Even so, though prediction markets still bet on Trump, uncertainty about which way the election is headed is nudging investors into safer havens-particularly in gold and the US dollar, which have appreciated in the past couple of weeks.
The Rallying Dollar and Safe Haven Demand
The dollar, too, is playing its part in the steep downturn in Bitcoin. The dollar rallied amid rising speculation that the Federal Reserve may slow the pace of its interest rate cuts in coming months.
That supported Treasury yields, which pressure speculative assets like cryptocurrencies. Investors flee high-risk investments, such as Bitcoin, when Treasury yields rise, opting for bonds and gold.
This demand for the safe-haven asset has sent gold to its record high, and it would be interesting to note investor sentiment in these adverse scenarios.
Gold, because of its centuries-old history, is always perceived as a reliable store of value in uncertain times, both political and economic, while Bitcoin and other cryptocurrencies are seen as volatile and risk-prone.
Overall Crypto Market Lead by Bitcoin
In cryptocurrency, other digital assets tend to mirror the leader, Bitcoin. That was also the case as broader crypto markets suffered declines in the wake of Bitcoin’s drop. Ether, the second-largest by market capitalization, fell 3.5% to $2,642.39.
Other major altcoins reported losses as well: Solana dropped 1.5%, Cardano lost 2.2%, and Polygon fell 2.5%. Ripple dropped 0.9%.
The meme coins, which include some of the most speculative and volatile ones such as Dogecoin (DOGE), weren’t spared this loss either and are down 1.2% in the case of DOGE.
More broadly, the retreat also reflects the fact that crypto assets lack somewhat of a separation between one another, where a slide in Bitcoin often replicates in similar slopes of other digital assets.
Rate Uncertainty Adds Further Pressure
Apart from the uncertainty caused by elections and dollar strength, growing uncertainty over monetary policy by the Federal Reserve stands as one more key pressure point for Bitcoin and the crypto market at large.
Expectations of an aggressive cut in interest rates by the Fed seem to be receding, causing traders to reassess their positions in riskier assets. This is an overarching sentiment that has driven the dollar to near three-month highs and is also pushing Treasury yields higher.
High interest rates usually burden speculative assets such as cryptocurrencies because they increase the cost of holding non-yielding assets. This is why traders are currently heavily pricing in a higher terminal rate for the Fed, which continues to pressure Bitcoin and other cryptocurrencies over a more extended period of high rates.
Conclusion
Bitcoin has lately plunged amid broader market politics of uncertainty in the lead-up to the upcoming U.S. presidential election. Though there was hope in the initial days of Donald Trump’s candidature, which was acting as a positive sentiment investor, now the closeness between Trump and Harris is frightening the risk-aversive investors into the markets.
Strength in the U.S. dollar and demand for safe-haven assets like gold have been other factors working against Bitcoin’s advance.
As the elections gets closer, crypto markets may continue to stay volatile in the near term, depending on which way that uncertainty stands. The policies from the Federal Reserve should determine in the coming months whether market sentiment shifts further in one direction or another.
Bitcoin, meanwhile, keeps on feeling the pressure, with its focus remaining keen on trading key levels at or around $70,000 as a potential turning point for the cryptocurrency’s next major move.
