Crypto volatility may spike if US election is ‘too close to call’ —FalconX

As the United States approaches its much-anticipated election, uncertainty looms over financial markets, with cryptocurrency being no exception. Market analysts, including David Lawant, Head of Research at FalconX, caution that if the presidential race is tightly contested, the crypto market could experience intensified volatility. The possibility of a close call raises concerns of prolonged indecision, which could unsettle Bitcoin and other digital assets as they await a resolution.

Lawant highlights that “additional volatility could emerge if results are too close to call,” which could prolong the current trend of market indecision. Despite these challenges, he suggests that a clear resolution post-election could lay the groundwork for renewed market direction, bringing much-needed stability to crypto traders.

Market Participants Eager for Clear Direction

The crypto market has experienced what some experts call “directionless trading” since April, when Bitcoin's price reached a range of approximately $53,991 to $73,149. During this period, traders have watched with bated breath as prices oscillated without significant upward or downward momentum.

Market participants are now hopeful that the election outcome, regardless of which party wins, will serve as a catalyst to shift crypto prices toward a more definitive path.

Lawant points out, “After six months of directionless trading, markets appear eager to move past election uncertainty toward firmer ground.” His insights highlight a widely felt need for directional clarity in the crypto space. The sentiment suggests that once the election passes, traders may begin positioning themselves more confidently in the market, aiming for a clearer trend.

How a Trump Win Might Influence Crypto Gains

In anticipation of the election results, opinions vary on which outcome might be most beneficial for the crypto market. Lawant and other experts observe that a Donald Trump victory could result in stronger crypto gains due to his pro-industry stances and clearer regulatory direction for digital assets.

Swyftx lead analyst Pav Hundal adds that “a Trump victory would likely provide a dopamine hit,” indicating that investor sentiment may align with a more predictable crypto trajectory if Trump assumes office.

This optimism stems from Trump’s historically supportive stance toward deregulation, which many believe could extend to the crypto sector. If he wins, market participants may expect favorable policies or enforcement stances that could invigorate crypto projects and draw in new capital. However, this is speculative and depends on broader regulatory trends that could unfold in the coming months, regardless of the election outcome.

Bullish Sentiment for Bitcoin and Solana

Bitcoin and Solana have emerged as potential standouts in the crypto space, with analysts predicting favorable outcomes for both assets. Lawant specifically identifies Bitcoin as a likely beneficiary of exchange-traded fund (ETF) flows, which he describes as the “primary source of new capital” for the crypto sector in 2024. The emergence of ETFs in the U.S. market has indeed been a significant development, drawing in institutional investors who previously shied away from direct investments in volatile assets like Bitcoin.

Meanwhile, Solana, currently trading at approximately $167, is gaining attention for its potential as a strong performer in the months ahead. Lawant notes that Solana’s robust ecosystem and active development community position it well for profit diversification among crypto investors. Given its reputation as a high-performance blockchain network, Solana is attracting those who seek alternatives to Ethereum, especially in decentralized finance (DeFi) and non-fungible tokens (NFTs).

Despite these positive projections for Bitcoin and Solana, one prominent player remains notably absent from Lawant’s analysis: Ether (ETH). “ETH remains notably absent from most discussions,” he states, reflecting a sentiment that some investors may be diverting attention away from Ether in favor of newer, high-growth assets like Solana.

Post-Election Trends: Bitcoin Eyes New Highs

Options traders appear particularly optimistic about Bitcoin’s potential to reach new highs following the election. Recent data from crypto exchange Deribit shows that Bitcoin’s Open Interest (OI) — a measure of outstanding futures contracts — is heavily concentrated around the $80,000 mark. This trend suggests that a substantial number of traders are positioning themselves for Bitcoin to test or even surpass its all-time high shortly after the election concludes.

Lawant’s predictions align with those of Dan Tapiero, founder of 10T Holdings, who maintains a bullish stance on Bitcoin irrespective of the election’s outcome. Speaking at a recent conference, Tapiero remarked that “the election will pass,” and he expressed confidence in Bitcoin’s long-term growth trajectory, predicting it could eventually reach $100,000 per coin.

Tapiero’s viewpoint underscores a broader consensus among industry insiders who believe that, regardless of political developments, the overall direction for digital assets like Bitcoin remains upward due to increasing institutional interest and adoption.

Broader Market and Institutional Trends

Lawant’s insights reflect a wider sentiment that institutional and retail investors alike are ready to move past the election cycle and embrace a more focused trading environment. With the U.S. election serving as a pivotal moment, the market could experience a shift from speculative trading to more data-driven investment strategies. This transition is likely to be fueled by the expected approval of several Bitcoin ETFs, which could attract substantial capital from mainstream financial institutions.

In addition, as more traditional asset managers turn their focus toward crypto, expectations are high for an influx of new investment vehicles that will make digital assets more accessible. With the evolving regulatory environment and greater transparency around crypto ETFs, the market appears poised to accommodate this wave of institutional capital. For traders, this shift means that Bitcoin and other key assets may benefit from sustained inflows, adding to overall market resilience.

The Role of U.S. Voters in Crypto Market Sentiment

Interestingly, crypto adoption is becoming an important consideration for U.S. voters. A recent poll conducted by Paradigm found that approximately 5% of U.S. voters identify as single-issue crypto voters, meaning they prioritize cryptocurrency policies when choosing candidates. This statistic highlights the growing influence of digital assets in American political discourse and suggests that future elections may see even greater focus on crypto regulations.

The potential for tighter election outcomes and the influence of crypto-focused voters could add a layer of complexity to market dynamics post-election. Analysts believe that as more Americans consider crypto’s impact on the economy, policymakers may face increased pressure to clarify their stances on digital asset regulations. This shift would likely have implications for market stability, especially in times of political change.