Bitcoin has emerged as the biggest election winner as investors rush to move their cash into riskier markets.
The benchmark cryptocurrency surged by more than $1,000 since November 3, the day voting to elect the next US president started. As of this Thursday, it has come closer to hitting $15,000, a level it last tested in January 2018 upon establishing its all-time high near $20,000 the previous month.
Many traders agreed that closing above $15,000 would pave Bitcoin’s way to extend its gains towards $16,000. Some even suggested a flawless price rally towards $20,000 if Democratic nominee Joe Biden beats his Republican rival, Donald Trump, in the election race.
$BTC 20K now doable in 2020
25K-30K in 2021, all possible. Going to see a heavy string of positive bitcoin headlines next year.
— Alex (@classicmacro) November 5, 2020
Mr. Biden was leading Mr. Trump by 264-214. The winner needs 270 votes to become the next US president.
Bitcoin bulls see a Biden win as a signal towards a bigger and broader coronavirus stimulus package. Earlier this year, the cryptocurrency surged by as much as 250 percent after the US government approved a $2 trillion relief for American households and businesses battered by the pandemic’s economic aftermath.
Its gains also appeared as the Federal Reserve slashed its benchmark interest rates to near-zero and boosted its bond-buying program indefinitely. That reduced the purchasing power of the US dollar, prompting investors to seek investment alternatives elsewhere.
But warning signals appeared in the latest Biden-driven Bitcoin rally. The risks of a downside correction surfaced as technology stocks surged on Thursday, as well, for reasons that did not concern a Democratic sweep over the US election.
Instead, the top names, including Apple, Amazon, Alphabet, and Facebook surged amid fading expectations of the Democrats winning back the Senate. As many analysts predicted earlier, a majority in the upper house would enable Mr. Biden to introduce new regulations for tech companies and increase taxes on American corporates.
Meanwhile, Senate control would also prompt Mr. Biden to fulfill a crucial campaign promise of launching a $2 trillion government spending program to boost US growth and fuel inflation.
But with Republicans poised to take back Senate, one can expect more delays in the second stimulus bill. That, in turn, could play a spoiler in the ongoing Bitcoin price rally despite its long-term bullish bias.
The concerns are widely missing for now as Bitcoin continues to teat one key resistance after another.
Bitcoin Technical Outlook
The weekly chart above shows Bitcoin in overbought territory (with its Relative Strength Index above 70.
Traders expect to hold on to the short-term bullish positions until the final voting count. If Mr. Biden wins the presidency and loses the Senate majority, Bitcoin could correct lower towards $14K-14.5K. If he gains both, then a $16K-retest looks like a sure thing.
On the other hand, a Trump presidency could lead the prices below $14K because it would effectively end the prospects of a bigger stimulus deal.