This week, spot bitcoin exchange-traded funds (ETFs) recorded their largest outflows since May, with $541 million withdrawn on Monday alone.
Agne Linge, head of growth at WeFi, commented on the trend, noting the impact of the upcoming U.S. presidential election. “The uncertainty surrounding this election, considered one of the most consequential in recent years, has left many investors in a cautious, wait-and-see stance,” Linge told TheStreet Crypto. “With either candidate potentially influencing market sentiment, it’s understandable that some investors are pausing their activity.”
Both presidential candidates have hinted at supporting the crypto industry, pledging to provide greater regulatory clarity in the sector. But the volatility historically tied to election cycles and political shifts is causing many to shy away from riskier assets like bitcoin. “Until the election results are in, risk assets are likely to remain unattractive,” Linge added, hinting that BlackRock IBIT investors may prefer to sit this one out until the dust settles.
Looking ahead, the popular trading platform Deribit estimates bitcoin’s price could fluctuate between $60,000 and $80,000 in the weeks following the election, based on prevailing bets for price movements.
Bitcoin’s value surged to an all-time high of $73,798 in March, fueled by the January launch of bitcoin ETFs. Despite its typical volatility, bitcoin has still seen a 60% rise this year, surpassing traditional safe-haven assets like gold.
Adding to the market uncertainty is the Federal Reserve’s anticipated rate cut announcement later this week, following a similar reduction in September. Analysts are expecting another 0.25% cut, which could ripple across financial markets. According to Linge, “Bitcoin stands to benefit in the long run because lowering interest rates increases liquidity in the lending market. As this extra liquidity dilutes the value of the U.S. dollar, many investors are likely to seek alternative stores of wealth to hedge against inflation – a role bitcoin, through BlackRock’s IBIT, is well-positioned to fulfill.”
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