Bitcoin awaits US election results to make a move

By: Konstantin Anissimov
Konstantin Anissimov
Konstantin’s responsibilities at CEX.IO include customer relationships with institutional and VIP clients, overseeing the creation of the company’s development strategy, new… read more.
on Nov 7, 2020
  • Bitcoin investors grow concerned over the US election.
  • Historical data shows that BTC may be unaffected by the results.
  • Even though the technicals forecast a potential correction, prices sit on top of stiff support.

Bitcoin is going through high levels of volatility as the US presidential election takes place. While it remains whether the Democratic or Republican party will win, historical data shows that the flagship cryptocurrency may resume its uptrend after Americans are done casting their ballots. 

Bitcoin is resilient ahead of US election

While most cryptocurrencies in the market have incurred significant losses over the past few days, Bitcoin continues trending upward. The bellwether cryptocurrency was able to make a new yearly high of $14,140 on October 31st. Although prices recently took a hit because of fears over the US election, BTC partially recovered.

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It remains uncertain how a win by the Democratic or the Republican party will affect the cryptocurrency market. But historical data shows that Bitcoin was able to weather the storm during the last two US presidential ballots.

For instance, the pioneer cryptocurrency dropped more than 20% roughly two weeks before the 2012 election. After it was confirmed that Barack Obama was re-elected for his second term as president of the US, confidence returned to the market, and Bitcoin marched towards higher highs. 

A similar price action took place after Donald Trump was elected the US’s 45th president in 2016. BTC had taken a 12% nosedive five days before the ballots were counted and resumed its historic uptrend right after.

Now that investors seem uneasy about Bitcoin’s future in light of the election results, history may repeat itself. 

Technical analysis: Short-Live Correction Before Higher Highs

The Tom Demark (TD) Sequential indicator is about to flash a sell signal on BTC’s daily chart. The bearish formation will likely develop in the form of a green nine candlestick. Such a technical pattern suggests that a spike in selling pressure could see prices retrace for one to four daily candlesticks before resuming the uptrend.

In the event of a correction, IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model reveals two major support areas underneath Bitcoin. 

Based on this on-chain metric, more than 1.1 million addresses had previously acquired more than 600,000 BTC between $13,300 and $13,700. This demand barrier may absorb some of the downward pressure and keep falling prices at bay. But if the number of sell orders is significant enough to push Bitcoin below it, the next critical area of interest sits between $11,600 and $12,000, the next signal for buyers of Bitcoin.

Here, roughly 820,000 addresses bought nearly 540,000 BTC. 

On the flip side, the IOMAP cohorts show that there aren’t any significant resistance barriers ahead of Bitcoin. The only considerable hurdle lies between $13,740 and $14,140, where 560,000 addresses hold approximately 200,000 BTC.  

Key price levels to watch

The ongoing US presidential election may prove to be a non-event for Bitcoin if history repeats itself. Regardless, investors must pay close attention to the $13,300 support and the $14,140 resistance level. A candlestick close above or below this price range will determine where the flagship cryptocurrency is headed next. 

BTC could rise to $16,000 or higher if it slices through the overhead resistance while moving past support will trigger a retracement towards $12,000.

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