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09/11 update below. This post was originally published on September 10
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The bitcoin price has climbed back toward $60,000 per bitcoin after dropping toward $50,000 due to “extreme fear” taking hold of the market.
Now, as traders search for signs the market could be headed for recovery, analysts with the world’s largest asset manager and bitcoin spot exchange-traded fund (ETF) issuer BlackRock have warned they see more “volatility flare-ups ahead,” and predicted the Fed won’t cut rates as quickly as markets expect.
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BlackRock’s chief executive Larry Fink has led a bitcoin revolution on Wall Street this year but … [+]
“We see multiple factors driving market volatility: resurgent recession fears due to some softer economic data, pre-U.S. election jitters and profit-taking as investors make room for new stock issues,” BlackRock Investment Institute strategists led by Jean Boivin wrote in a note, adding: “We don’t see the Federal Reserve cutting policy rates as sharply as markets expect.”
The bitcoin price surged higher yesterday along with the stock market as traders await more inflation data this week that will likely set up the Federal Reserve for an either 25 basis point or 50 basis point interest rate cut next week.
The Fed is widely expected to cut interest rates when officials gather for the two-day policy meeting on September 17, its first post-pandemic era cut that could herald a new cycle of cheaper borrowing and fresh liquidity.
Last week, a weaker than expected U.S. job report sparked a bitcoin price crash, with the slowing jobs market fueling fears the Federal Reserve has waited too long to cut interest rates and could have tipped the economy into recession.
“Even as inflation is falling toward the Fed’s target in the near term, higher inflation over the medium term will limit how far the Fed can cut rates, we think,” Boivin wrote. “Growth jitters and cooling inflation have driven 10-year yields to 15-month lows as investors have priced in more than 100 basis points of cuts by year-end and about 240 basis points of cuts over the next 12 months—implying a Fed response to a recession.”
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The bitcoin price has dropped back from its recent all-time high of $70,000 per bitcoin, fanning … [+]
Meanwhile, analysts with broker Bernstein warned the bitcoin price could crash almost 50% to around $30,000 if vice president and 2024 Democratic Party nominee Kamala Harris wins November’s U.S. presidential election.
However, they also think that a victory for former U.S. president and Republican nominee Donald Trump could mean the bitcoin price surges to $90,000 thanks to Trump’s recent embrace of the technology.
09/11 update: Crypto remained a looming specter during the Donald Trump’s and Kamala Harris’ presidential debate, going unmentioned despite the crypto industry spending $119 million on the election so far.
Almost all of the funds donated have been via super political action committees, with the Fairshake PAC making up the majority of that, according to consumer advocacy group Public Citizen’s August report.
Trump is broadly seen as the crypto candidate after the former president embraced bitcoin and crypto this year, putting him at odds with Harris who is expected to continue the Biden administration’s hostile approach to crypto despite her recent overtures and olive branches to the world of crypto.
A large majority of U.S. crypto holders (73%) told a Gemini survey that they will consider a candidate’s digital asset policies when they vote in the U.S. presidential election this year.
The debate has evened the playing field between the two candidates, according to the Polymarket prediction platform that now puts both Harris and Trump on 49%.
“The market assessed Kamala Harris won the debate, in particular in the early stages, which translated into a small move down for crypto,” Caroline Mauron, cofounder of Orbit Markets, a provider of liquidity for trading in digital-asset derivatives, told Bloomberg.
“After the last three years of regulatory purge, a positive crypto regulatory policy can spur innovation again and bring the users back to financial products on the blockchain,” analysts led by Gautam Chhugani wrote in a note seen by Coindeskadding: “Elections remain hard to call, but if you are long crypto here, you are likely taking a Trump trade.”
The crypto-based prediction platform Polymarket currently favors Trump retaking the White House, with 52% of users betting he’ll win.
“Broader factors, such as changes in the Federal Reserve’s monetary policy or ETF flows, will also continue to influence market sentiment leading up to the election,” Yongjin Kim, the chief executive of crypto trading platform Flipster, wrote in emailed comments.