Bitcoin (BTC) is nearing a significant price range that analysts suggest will represent its first substantive resistance test. The cryptocurrency broke through the $69,500 mark on October 21, a level that had not been surpassed since late July, when Bitcoin-supportive U.S. presidential hopefuls Donald Trump and Robert F. Kennedy delivered much-discussed speeches at the Nashville Bitcoin Conference.
Amid this sustained upward trend, there is growing speculation within the futures market, with open interest reaching unprecedented highs.
Bitcoin’s Price and Trump’s Election Prospects
A report from the crypto exchange Bitfinex highlighted that market participants are considering a potential link between bitcoin’s price movements and Trump’s chances in the upcoming U.S. presidential election.
Analysts noted that his winning prospects seem to closely correlate with BTC price surges, suggesting that speculation regarding his potential success may be a primary driver behind the recent price increases. This correlation has strengthened since Trump publicly announced potential reforms in the Securities and Exchange Commission (SEC) and possible tax policies favoring cryptocurrency investors.
“Thus, the interaction between political factors and cryptocurrency prices is becoming increasingly apparent, with market participants keenly observing electoral developments as they evaluate potential future price trends for Bitcoin and other digital currencies,” analysts commented.
At the time of writing, Bitcoin was trading at $67,500, just a few thousand dollars shy of the critical $70,000 threshold. Continued interest in the spot market, influenced by macroeconomic factors like the election results, could pave the way for a breakout from Bitcoin’s eight-month consolidation phase. On the other hand, a lack of strong demand in the spot market could result in another rejection at the range’s highs.
Increasing OI Could Be Detrimental
As BTC moves closer to testing its resistance level, global open interest (OI) for perpetual and futures trading pairs has skyrocketed to new peaks. Recently, this metric reached $40.38 billion, indicating heightened speculation in the futures arena.
While a rise in open interest is typically interpreted as a sign of bullish sentiment among investors, analysts at Bitfinex caution that it may affect bitcoin’s price movements as traders adjust their positions in anticipation of potential market shifts. Such conditions could prove problematic for the market, leading to increased volatility and sharp corrections, especially if the speculation does not align with the underlying market fundamentals.
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