- Bitcoin shed a lot of its recent gains during the week preceding Election Night in the U.S
- Historical patterns pointed to an upcoming bull rally on the charts
After peaking ever closer to its all-time high [ATH] with a price of $73,600, Bitcoin [BTC] took a detour. In fact, it slid down to a low of $67,459 on 3 November.
However, does this decline mean the bear market is back or is it simply a short-term correction?
Why is Bitcoin down?
To answer the question, AMBCrypto took a closer look at BTC’s historical data to uncover that the price drop might actually be the latter. For instance, back in 2016, the cryptocurrency depreciated by 10% just days before the election.
Similarly, in 2020, Bitcoin’s value dropped by 6.2%. BTC’s ongoing decline seems to be mirroring these past patterns, with Bitcoin losing over 8% of its value since the aforementioned high.
Election-driven uncertainty
A similar outlook was shared by Quinten Francois, Co-founder of WeRate, who explained that the period of heightened unpredictability before elections directly impacts investor sentiment. He posted on X,
“Financial markets don’t like uncertainty. There is a lot of uncertainty going into election week. That’s why $BTC is down.”
The Founder of CryptoSea, famously known as Crypto Rover, supported this perspective by stating,
“Bitcoin always dumps right before the U.S. elections.”
Here, it’s worth pointing out that at press time, the cryptocurrency had recovered to trade just under $69,000 on the charts.
What’s next for Bitcoin?
With the dip’s cause seemingly rooted in the uncertainty surrounding the upcoming elections, the pressing question is – What comes next for the king coin?
Well, previous patterns dictate that post-election periods have marked the beginning of bull runs that extend well into the following year.
In 2016, Bitcoin gained by approximately 60% two months after the election.
Source: TradingView
Additionally, an approximate gain of 150% was recorded after the presidential elections in 2020.
Source: TradingView
So, if history repeats itself, BTC could hit a new ATH in the upcoming months.
Finally, AMBCrypto’s analysis of the 1-year liquidation heatmap from Coinglass also alluded to the likelihood of more highs.
A strong cluster of liquidity was formed around $74,000. This magnetic zone could attract the price, marking a new ATH for the king coin.
Source: Coinglass
Altcoin outlook – Trump vs. Harris victory
While a Bitcoin bull run seems likely regardless of the election outcome, the outlook for altcoins varies. AMBCrypto previously reported that a Donald Trump win could mean a more favorable environment for altcoins.
This, because of possibly relaxed crypto regulations from the Republican administration. Clearer SEC guidelines on which altcoins qualify as securities could also trigger bull runs for the assets.
Also, AMBCrypto noted that as Bitcoin investors redistribute profits after elections, some altcoins could see gains. Nonetheless, the likelihood of a lasting “altcoin season” remains uncertain right now.