Top analyst explains why it’s likely Bitcoin, stocks will drift lower into elections 🚨 This article is 4 years old...
Top analyst explains why it’s likely Bitcoin, stocks will drift lower into elections
2 min read
Updated: Oct. 1, 2020 at 5:48 pm UTC
It’s been a quiet past few weeks for all markets, Bitcoin and crypto included. Save for some short-term volatility, legacy and crypto markets are rangebound, trading well below local lows.
Some analysts like Thomas Lee, co-founder of Fundstrat Global Advisors, is charting a move back to the all-time highs for these markets.
But Avi Felman, a trader at crypto firm BlockTower Capital, thinks that the most likely trajectory for markets will be a drift lower as opposed to any large bouts of volatility.
Bitcoin, crypto, stock markets to drift lower into the election
Felman notes that around elections, markets are historically rangebound as there is uncertainty about the candidates, meaning there is uncertainty about what policies will be implemented once January comes.
He did explain, though, that this time around, there is more short-taking than normal due to potential conflicts stemming from mail-in ballots:
“Market has been raising a lot of cash, taking risk off into the election. Historically the month after the election is fairly good for equities, but we’re seeing a lot of shorts come in because of the worries arnd mail-in ballots and the close nature of the race.”
Speaking in crypto, in particular, Felman noted that the crypto space is unlikely to see strong fiat inflows until this uncertainty passes:
“So we have people with lot’s of cash, but no real new bid side. Base case is sideways drift down, but with real potential for a move that ends with everyone chasing. There’s also a timeline on this move. I think there’s a way to play that.”
On the bright side, the value of U.S. dollar stablecoins recently passed $20 billion.
This means that there may be an influx of capital into Bitcoin, Ethereum, and other top crypto-assets if there is proper reason among investors to do so, be that stimulus from the U.S. Senate, election certainty, or other macro factors.
What comes afterward?
What comes after the election for Bitcoin and crypto?
Nothing, in particular, but analysts are optimistic about the long-term view of this market despite whatever consolidation may be going on in the near term.
Raoul Pal, CEO of Real Vision and a former head of hedge fund sales at Goldman Sachs, recently commented that macro trends like the commitment to inflation by the Federal Reserve makes Bitcoin a good asset to own:
“I know bitcoin and gold are selling off right now and may go further but with Powell today, it tells you they have no desire to raise rates and a skewed desire to print more. That plays to the inherent upside skew in both assets.”
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
BlockTower Capital
BlockTower is a leading cryptoasset investment firm, applying professional trading, investing and portfolio management to an emerging digital asset class..
Avi Felman is the Head of Trading at BlockTower Capital and a former analyst at CryptoSlate..
Thomas Lee serves as the Managing Partner and the Head of Research at Fundstrat Global Advisors.
A former hedge fund manager who retired at 36, Raoul Pal is a co-founder of Real Vision, a financial media company offering in-depth video interviews and research publications from the world’s best investors.