Main Points:
- The U.S. Presidential election and global liquidity cycle are converging, potentially triggering the next bull market for cryptocurrencies.
- Historical cryptocurrency market cycles, such as those in 2017 and 2021, were driven by industry growth and unprecedented rate cuts.
- Currently, two powerful forces—the U.S. election and a new global liquidity cycle—could break Bitcoin out of its recent trading range.
- While U.S. election outcomes are not strongly correlated with crypto price changes, global liquidity shifts, especially driven by the Federal Reserve and China, may have a greater impact.
A New Cycle for Cryptocurrencies
Cryptocurrency markets often experience dramatic shifts triggered by large-scale events. In the past, the market expansion of 2016–2017 was led by industry development, while the COVID-19 era’s unprecedented rate cuts fueled the 2020–2021 bull run. Now, two significant factors are converging: the U.S. Presidential election and the beginning of a global liquidity cycle. According to David Lawant, Head of Research at FalconX, these factors could break Bitcoin out of its $58,000–$70,000 range and ignite a new wave of growth across the crypto sector.
The U.S. Presidential Election’s Growing Significance
The Role of Cryptocurrencies in the Election
For the first time, cryptocurrencies have emerged as a significant topic in U.S. political debates and election funding. Political figures are discussing crypto policies openly, and candidates are using blockchain-based platforms like Polymarket to predict outcomes in real-time. The Polymarket platform has attracted over $1 billion in bets related to the election, highlighting its growing relevance.
Market Reactions to Election Trends
Analyzing how the market has responded to election odds provides insights into the broader impact of political outcomes. A comparison of Trump and Harris’s odds on Polymarket with Bitcoin’s price movements reveals no direct correlation between election results and crypto performance. However, this does not diminish the election’s importance for cryptocurrencies. With less than a month remaining before election day, the relationship between political outcomes and market behavior may intensify.
Interest Rate Projections and Crypto’s New Regime
Global Liquidity’s Role in Market Movements
Recent changes in global liquidity have dramatically impacted markets, including cryptocurrencies. The Federal Reserve’s rate cut cycle and China’s surprising market stimulus are key drivers of crypto’s recent price increases. While crypto lacks the historical data seen in traditional assets, examining the relationship between interest rates and crypto prices can still be insightful. A detailed analysis of U.S. Treasury yields and Bitcoin prices shows how macroeconomic factors might shape the crypto market’s trajectory.
Soft Landing or New Turbulence for Cryptocurrencies?
The ongoing rate cuts suggest that macroeconomic conditions will have a significant short-term impact on cryptocurrency prices. This scenario, where the market experiences a “soft landing,” may create a favorable environment for digital assets. Unlike past cycles driven by internal industry growth or pandemic-induced rate cuts, this time the macroeconomic landscape could dominate market sentiment.
Future Outlook: What’s Next for the Crypto Market?
Election and Liquidity as Key Drivers
The low liquidity observed in the crypto markets following Labor Day signals that investors are in “wait-and-see” mode. Factors like geopolitical tensions and supply-demand imbalances may continue to affect the market. However, the two most critical factors shaping the market through 2025 will be the U.S. Presidential election and global liquidity conditions. The coming months will be pivotal in determining how these trends unfold, potentially setting the stage for the next significant crypto market movement.
Preparing for the Next Market Shift
As we approach the U.S. election and navigate global liquidity shifts, the crypto market faces a critical crossroads. While political outcomes may not directly correlate with market movements, the broader economic backdrop, including rate cuts and global financial policies, is likely to play a more prominent role. The next few months will provide crucial insights into how these factors interact, potentially marking the beginning of a new bullish cycle for digital assets.
