StanChart sees high volatility for Bitcoin in lead up to US elections

Standard Chartered’s global head of digital assets research, Geoffrey Kendrick, cautioned that Bitcoin (BTC) may experience heightened volatility in the days before the US presidential elections.

Kendrick’s analysis pointed to key metrics indicating an optimistic yet cautious market sentiment among Bitcoin traders as investors brace for economic and regulatory shifts related to the political event.

Cautious optimism

Recent data reveals that Bitcoin’s funding rates — a measure reflecting market sentiment and the premium paid to hold long or short positions — have begun to favor bullish traders, with long positions gaining traction.

Positive funding rates often signal that traders are willing to pay a premium to maintain upward bets, suggesting confidence in Bitcoin’s potential for gains in the short term.

Kendrick highlighted that Bitcoin’s open interest has also stabilized, showing steady engagement among investors without the wild fluctuations in leverage seen in previous months. This stability could indicate a balanced sentiment as traders await potential price shifts related to the election’s outcome.

Another encouraging sign is the recent moderation in short liquidations, which had previously spiked. This decrease suggests a reduced appetite for bearish bets as traders become cautiously optimistic.

According to Kendrick, these trends collectively position Bitcoin for a potentially favorable performance, though he noted that the crypto’s history of volatility around major political events warrants caution.

Post-election outlook

In a report published last week, Kendrick projected that if former President Donald Trump wins the presidency, Bitcoin could see a significant price surge, rising as much as 10% in the immediate aftermath, potentially reaching around $80,000.

Kendrick also noted that a Republican sweep of both the presidency and Congress could create a pro-crypto regulatory environment, which may propel Bitcoin even higher, with a year-end target of $125,000.

Conversely, Kendrick indicated that a Kamala Harris victory might introduce short-term uncertainty for Bitcoin, with an initial price dip expected.

However, he predicted that the downturn would likely be temporary, as the market would adjust to a more measured regulatory pace under a Harris administration. He added that Bitcoin could recover and stabilize around $75,000 by the end of the year, driven by broader market confidence despite a less aggressive regulatory approach.

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