Historically, Bitcoin rallies during election periods, and the crypto king could get even more support from the fact that it is a halving year as well. Despite this optimism, on-chain analytics from Santiment warns of a potential reversal because of high market sentiment. Meanwhile, Cantor Fitzgerald’s CEO Howard Lutnick is advocating for Bitcoin to be classified as a commodity and also called for clearer regulations. Recent inflows into US Bitcoin ETFs also prove just how strong investor interest in BTC currently is after more than $1.1 billion flowed into the funds throughout the past week
Bitcoin Set to Surge
According to the chief investment officer of ZX Squared Capital, Bitcoin's price is set to benefit from the upcoming United States presidential election, regardless of who wins. CK Zheng suggests that both Republican and Democratic parties have failed to really address the growing US debts and deficits, which is a situation that could favor Bitcoin.
Historically, Bitcoin has performed well during US presidential election periods. Zheng expects the trend to continue, especially after the halving event in April, which has typically led to strong fourth-quarter performances.
Bitcoin has often rallied in the fourth quarter. CoinGlass data reveals that it surged by more than 50% six times since 2013. The halving events tend to amplify these gains. In 2020, during the last US presidential election and Bitcoin’s halving year, the crypto rallied by 168% in the final quarter. Zheng believes Bitcoin could reach a new all-time high by the end of Q4 or shortly thereafter.
Bitcoin quarterly returns (Source: Coinglass)
While the halving usually has a very noticeable impact on the price of BTC, the CEO and founder of PR firm YAP believes that the bigger impact lies in the increased retail interest that follows. This attention typically leads to a media frenzy, which brings even more attention to the crypto industry. Yap also believes that these moments present the perfect opportunities for the industry to showcase more accessible and practical applications for new users to adopt.
Zheng also pointed out that the Federal Reserve’s recent 50 basis point interest-rate cut could be bullish for Bitcoin if the US economy manages a soft landing. A soft landing happens where inflation is controlled without causing a recession, which could boost liquidity and risk-on assets like Bitcoin. If the Federal Reserve succeeds, Zheng believes Bitcoin’s price will likely track the NASDAQ.
Leo Fan, founder of zero-knowledge proof platform Cysic, added that Bitcoin's status as "digital gold" is also becoming more prominent as institutional investors look for hedges against economic instability.
Bitcoin Faces Market Sentiment Hurdle
On the other hand, on-chain analytics platform Santiment predicts that Bitcoin may not reach a new all-time high soon, despite a surge in market sentiment. On Sept. 30, Santiment reported that optimism surrounding Bitcoin has grown quite a bit, with 1.8 bullish posts for every bearish one. However, the platform warned that when sentiment becomes overwhelmingly positive, markets often move in the opposite direction. This suggests that expectations for a new high may need to be tempered.
Bitcoin’s price has steadily climbed from below $58,000 on Sept. 17 to over $66,000 on Sept. 28. This performance has put Bitcoin on track to record its best-ever September. Despite its impressive growth over the past two weeks, it could still be a signal that the market is nearing a reversal.
Jameson Lopp, chief security officer at Casa, also noticed a shift in mainstream media’s portrayal of Bitcoin, with a reduction in fear, uncertainty, and doubt (FUD). Lopp pointed out that negative narratives are fading as Bitcoin sentiment improves.
The Bitcoin Fear and Greed Index tracks market sentiment, and reflected this shift as it reached a “greed” level of 61 on Sept. 30. This is a big change from the “extreme fear” levels earlier in the month when the index dropped to 22 on Sept. 6.
Bitcoin Fear and Greed Index (Source: Alternative)
There is also bearish sentiment in China’s stablecoin market, where demand for dollar-pegged stablecoins has waned. When stablecoins trade at a discount in China, it is usually seen as a bearish signal for Bitcoin.
At press time, BTC was trading hands at $64,081.08 after its price dropped by just over 2% throughout the past day. The crypto king was still up by about 8% on its monthly time frame.
Bitcoin Should Be Treated Like a Commodity?
Cantor Fitzgerald CEO Howard Lutnick recently appeared on Fox Business and advocated for Bitcoin to be classified as a commodity, similar to gold and oil. During the interview, Lutnick talked about the fact that Bitcoin’s status as a commodity is already well-established and called for clearer regulation in the crypto space. He stated that Bitcoin should be treated like any other commodity and shared that he is concerned about regulators not fully understanding the digital asset industry.
Lutnick also predicted that over the long term, commodities and equities will merge, though he did acknowledge that this process could take up to 20 years. Additionally, he criticized regulators for their lack of comprehension with regards to the significance of Bitcoin and digital assets, and he believes it is very necessary for these regulators to "get it right."
In July, Lutnick announced the launch of Cantor Fitzgerald’s Bitcoin lending program at the Bitcoin 2024 conference in Nashville. The program will start with $2 billion in lending, offering leverage to Bitcoin holders and bringing Bitcoin further into the global financial market.
In addition to his role in the crypto space, Lutnick is set to co-lead Donald Trump’s transition team if the former president wins the upcoming election. His involvement is seen as a positive development for the crypto industry, because Lutnick is considered to be a strong advocate for Bitcoin and digital assets.
US Bitcoin ETFs See Record Inflows
The improvement in sentiment surrounding Bitcoin was very clear in the performance of US spot Bitcoin exchange-traded funds (ETFs) over the past week. The Bitcoin ETFs in the United States attracted more than $1.1 billion in inflows since Sept. 23, which made it the largest week of inflows since mid-July.
Farside Investors reported that Sept. 27 alone saw $494.4 million in inflows.This was the ETFs’ best daily performance since June. Leading the weekly inflows was BlackRock’s iShares Bitcoin Trust with $499 million, the ARK 21Shares Bitcoin ETF with $289.5 million, and Fidelity’s Wise Origin Bitcoin Fund with $206.1 million.
Bitcoin ETF flows since Sept. 23 (Source: Farside Investors)
Other Bitcoin ETFs, including those from Invesco, Galaxy, Franklin Templeton, Valkyrie, and VanEck, saw inflows ranging from $5.7 million to $33.3 million. The WisdomTree Bitcoin Fund did not record any inflows for the week. Overall, the 11 spot Bitcoin ETFs have amassed a total of $18.8 billion in inflows since their launch in January.
Ethereum ETF flows since Sept. 23 (Source: Farside Investors)
In addition to Bitcoin, US spot Ethereum ETFs also experienced an impressive inflow of $85 million last week, their largest since early August. Since their launch in July, these Ethereum-based products have seen inflows exceeding $1.1 billion, although this figure includes $2.9 billion in outflows from the Grayscale Ethereum Trust.
