The price of Bitcoin suddenly fell 3% in a few hours, along with the US dollar, gold and stocks, while the outcome of the US elections is still uncertain.
The price of the Bitcoin (BTC) fell suddenly 3% in a few hours on 4 November to US$13,566, after rising briefly above US$14,000. At the same time, the US dollar, gold and stocks fell together.
Analysts point to the uncertainty surrounding the election as the catalyst for the sharp correction.
Why markets fell after rising during the vote count
When the mainstream media were actively reporting the vote count, the price of Bitcoin and the shares went up. However, after the vote count was over, all risky and risk-free assets fell in the red, including the S&P 500 futures.
Tracy Alloway, a Bloomberg financial journalist and co-host of the Odd Lots podcast, said this was a likely result due to President Donald Trump’s statement. She said:
„The futures of the S&P 500 do not like Trump’s suggestion that he go to the Supreme Court to challenge the election results. Now in the red. ”
The recent fall of Bitcoin is remarkable, as it fell simultaneously with the dollar. Normally, when the dollar falls, the Bitcoin and gold tend to rise as both reserves of value are priced against the dollar.
As reported by the Cointelegraph, BTC has seen a low correlation with other assets, including equities, in recent weeks. Thus, the collective correction among most major assets appears as an unexpected market response.
What will happen to BTC in the short term?
According to CryptoQuant data, the estimated leverage rate of Bitcoin futures at Binance reached an all time record. This indicates that there are more traders in the BTC Binance derivatives market than ever before.
Ki-Young Ju, CEO of CryptoQuant, warned traders on November 4th of increased volatility caused by cascading settlements. If there are an abnormally large number of contracts in the market, this can cause large price movements.
In the short term, given the BTC’s repeated rejection of US $14,000, investors are leaning towards a market downturn.
There are several key levels of support for Bitcoin in the near future. First, the $13,300 area was heavily defended last week. If the BTC continues to hover above $13,300, that would indicate buyer resilience.
Second, the US$13,000 level has been supported by groups of whales since early November. This means that whales have accumulated large amounts of BTC at this level, making it an area of interest to buyers.