This spike in BTC’s price happened after institutional investors pulled back from U.S. Bitcoin ETFs, which saw net outflows on election day. Trump’s promises, including removing SEC Chair Gary Gensler, supporting Bitcoin mining, establishing a Bitcoin reserve, and blocking a U.S. CBDC, could fuel more optimism in the crypto community which may boost BTC’s price even more. However, some industry leaders are still a bit skeptical of his ability to actually fulfill these promises.
Bitcoin Shorters Face Massive Liquidations
Bitcoin traders betting on an election-driven price decline were hit with massive liquidations after the crypto king surged to a new all-time high (ATH) of just over $75,000. This rally wiped out around $190 million in Bitcoin short positions within hours, fueled by intense spot market activity.
Bitcoin’s price action over the past 1 day (Source: CoinMarketCap)
Pav Hundal, a lead analyst at crypto exchange Swftyx, noticed a big shift in trading sentiment, with most order books showing strong buy-side demand. According to Hundal, “the crypto summer is back,” as traders seem increasingly confident in Bitcoin’s upward momentum.
On Nov. 6, Bitcoin surpassed its previous ATH of $73,679 and soared to a high of $75,000.85 on Coinbase. This resulted in large liquidations. CoinGlass data revealed that short positions worth close to $196 million were cleared in just 12 hours. Across the broader crypto market, total liquidations reached $483.16 million in the last 24 hours. Bitcoin shorts alone comprised $221 million of that figure. Dogecoin shorts also faced liquidations, with about $56 million wiped out after the price briefly spiked.
Liquidation heat map over 12 hours (Source: Coinglass)
However, Hundal believes that Bitcoin could see a pullback as the U.S. trading session unfolds. He also added that a correction could happen regardless of the presidential election outcome. On the other hand, he pointed out that the current rally is largely driven by spot purchases rather than derivatives. Spot buying tends to have a more lasting impact on price since it requires buying and holding the actual asset, unlike derivatives that merely speculate on Bitcoin’s value without actually affecting supply.
In the options market, traders seem to anticipate the election-induced volatility to somewhat stabilize. Derive founder Nick Forster shared that expectations for short-term price swings are still above average, and daily fluctuations are estimated around 4-5%. However, as the election results finalize, volatility may settle.
A second Trump administration could boost Bitcoin’s price even more, according to CK Zheng, co-founder of ZX Squared Capital. Meanwhile, 10x Research’s Markus Thielen is optimistic about a possible rise in BTC’s price to $100,000 by early 2025.
Institutional Investors Pulled Back from Bitcoin ETFs on Election Day
BlackRock’s spot Bitcoin ETF recorded its sixth net outflow since its launch after institutional investors pulled back on election day in the United States. On Nov. 5, the iShares Bitcoin Trust experienced a $44.2 million outflow, which made it the fund’s first net withdrawal since Oct. 10 when $10.8 million exited the fund.
Across the 11 U.S. spot Bitcoin ETFs, a total of $116.8 million was withdrawn. These outflows were primarily led by Fidelity’s Wise Origin Bitcoin Fund, which posted a $68.2 million outflow. The sole fund to receive an inflow was the Bitwise Bitcoin ETF, adding $19.3 million.
Bitcoin ETF flow (Source: Farside Investors)
This outflow was also the third consecutive day of withdrawals from U.S. spot Bitcoin ETFs, and happened just one day after the funds saw their second-highest day of outflows that totalled over $541 million. Despite the outflows, spot crypto markets were still able to surge.
Henrik Andersson, chief investment officer at Apollo Crypto, suggested that traders worldwide currently see Bitcoin as an election-driven trade. He also shared that Bitcoin may have already achieved 80% of this election-driven movement. He did still predict that Bitcoin could reach $100,000 by year-end under a Trump presidency.
Meanwhile, ETF Store president Nate Geraci believes that while election results could influence the regulatory approach, particularly SEC leadership, the impact on broader investment strategies is usually very overemphasized. In a blog post on Nov. 5, Geraci talked about the importance of a bipartisan, comprehensive crypto framework, which he considers the optimal long-term solution for ETF innovation. However, he still acknowledged that the election outcome will likely influence the pace at which crypto ETF developments unfold in the U.S.
Trump’s Election Win Fuels Bitcoin Optimism
Donald Trump won the U.S. presidential election that was held on Nov. 5. Multiple sources called the victory after his success in key swing states. The New York Times estimates that Trump will secure 306 electoral votes. Trump’s opponent, Vice President Kamala Harris, trailed behind in critical states like Pennsylvania, Wisconsin, and Michigan.
During his campaign, Trump made many promises that were aimed specifically at the crypto community. One of these promises that turned the most heads was his pledge to remove SEC Chair Gary Gensler.
Gensler was appointed by President Biden, and he led the SEC in numerous enforcement actions against crypto exchanges and blockchain projects. Trump stated that he will fire Gensler “on day one” of his administration. And he intends to replace him with someone more crypto-friendly. While Gensler’s term officially ends in April of 2025, Trump could try to remove him earlier if he can show cause.
Trump also promised to commute the sentence of Ross Ulbricht, the creator of the Silk Road marketplace, who is currently serving two life sentences plus 40 years without parole. Trump could either free Ulbricht immediately or reduce his sentence. Some of his supporters also argued that his punishment is excessive, especially considering that he did not engage in violent acts.
Another part of Trump’s crypto agenda includes encouraging Bitcoin mining in the United States. He even voiced that he has a desire to see ”all remaining Bitcoin made in the USA.” While the specifics of this initiative are still a bit unclear, some in the crypto community see his pro-mining stance as very bullish for the industry.
Trump also shared that he would support a “strategic Bitcoin reserve,” which would involve law enforcement agencies holding onto seized Bitcoin rather than liquidating it. Fans of this plan believe that retaining Bitcoin could eventually help the U.S. pay down its huge national debt. On the other hand, others argue that a lot of the seized Bitcoin actually belongs to other parties.
Additionally, Trump vowed to prevent the establishment of a central bank digital currency (CBDC) in the United States due to concerns in the crypto industry about government control over digital assets. While some people in the crypto world see CBDCs as a potential improvement over traditional banking, others worry they may infringe on personal privacy.
Despite these pledges, there is still some skepticism in the industry. ShapeShift founder Erik Voorhees criticized Trump’s pro-Bitcoin manufacturing stance as unrealistic and overly nationalistic. Casa wallet founder Jameson Lopp also questioned Trump’s plan for a Bitcoin reserve, and pointed out that a big portion of seized Bitcoin actually belongs to Bitfinex and should be returned.
While Trump’s promises stirred a lot of optimism among some in the crypto space, there are still a few realists who are more cautious and wary of the feasibility and sincerity of his statements.
This article was originally Posted on Coinpaper.com
