Bitcoin back in spotlight as election night approaches

It's been a year of ups and downs for Bitcoin, as the original digital currency has repeatedly tried to retake but fallen short of its all-time high of $73,096 reached in March of this year. Just recently, we saw a 12% rise that subsequently corrected back down 3-4%, an illustration of how Bitcoin is being pulled by multiple forces at present. That said, BTC is still up over 50% YTD despite the largely sideways trading that has dominated since Q2. With a bull market that has now lasted 22 months, the cryptocurrency is at a crossroads amid major uncertainty and a shifting monetary policy and regulatory climate. Whether BTC will manage to push forward to its long-awaited target of $100,000 or fall back below $60,000 will depend on numerous factors.

The two most influential of these are entirely independent of natural market forces: the upcoming US presidential election between Kamala Harris and Donald Trump and the Federal Reserve's pivot to more dovish monetary policy after an extended period of tightening. Traders and investors everywhere will be watching closely to see how these two situations develop over the key month of November for clues about crypto's trajectory in 2025.

Make Bitcoin great again

One of the most controversial and hotly contested presidential elections in US history is just around the corner as Republican candidate Donald Trump prepares to square off against the Democratic Party's choice, Kamala Harris, on 5 November. As is the case for most issues, the two runners also differ wildly when it comes to their stance on crypto. Donald Trump has been actively courting the community throughout his campaign, promising to "ensure every American has the right to self-custody of their Digital Assets, and transact free from Government Surveillance and Control." He has also pledged to make the US "the crypto capital of the planet" and BTC the "superpower of the world". With policy proposals that include the creation of a government stockpile of Bitcoin reserves and a ban on the Fed issuing its own CBDC, it's clear to see how Trump's claim of a soaring Bitcoin under his presidency could easily come to pass.

While Trump is his usual uncompromising and vocal self on the issue of crypto, Harris' silence is deafening. Her predecessor was a clear enemy of the sector, presiding over numerous SEC prosecutions of crypto exchanges, including high-profile cases against Binance and Coinbase. The Democrats' desire for more comprehensive regulation of digital assets and capital gains taxes on their profits is well known, which means that a Harris victory is likely to have at least a short-term negative impact on BTC. On the contrary, a Trump win should encourage the Bitcoin bulls.

The Fed cuts sharpen market

The US Federal Reserve made a dramatic return to a more dovish policy with an emphatic pivot that saw a 50 bps "double cut" after two years of >5% interest rates. This slash from the regulator really set the tone for the current monetary policy cycle and led to a resurgence in riskier assets, with BTC making double-digit gains in the days following the decision. Despite losing and regaining some since then, Bitcoin is still up over 6% on the monthly chart. With the next FOMC meeting scheduled for 6-7 November — just a day after the contentious US Presidential Election — many analysts are expecting another cut from the regulator.

In fact, the CME FedWatch tool estimates the chances of another 25 bps cut at over 90%. Combined with the right result on election night, this could come as a massive boon for Bitcoin and might even spark the next major leg up. Senior Fed officials have stated on record that the timing and extent of the next rate cut will be chiefly dictated by new economic data sets focusing on jobs data and inflation, with the regulator expected to receive the last of these by 1 November. The US central bank is typically unfazed by marginal cooling of the jobs market on a periodical basis, and with inflation within a hair of the 2% target, even larger rate cuts could be on the cards. These would not only act as a critical enabler for the economy; they would be a godsend for the wider crypto ecosystem, Bitcoin included.

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