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The crypto market cap tumbled 2.2% to $2.34 trillion on Tuesday amid geopolitical tensions and election uncertainty in the United States. Bitcoin, the queen of cryptocurrencies, fell below $67,000, pulling the entire market into its downward spiral.
Election uncertainty is weighing on the crypto market
On Wall Street this Tuesday morning, crypto investors sold their positions massively, worried about the uncertain outcome of the US presidential election.
A close race between former President Trump (63.5% chance according to Polymarket) and Vice President Harris (36.2%) is causing widespread risk aversion. Big investment funds are temporarily abandoning volatile assets like cryptocurrencies in favor of traditional safe havens.
The candidates’ differing positions on regulating the sector feed this nervousness. Trump has been outspoken in his support for cryptocurrencies, while Harris has maintained an ambiguous stance despite some encouraging statements. Faced with these regulatory uncertainties, institutional investors are massively reducing their exposure to the crypto market.
Trading volumes on major platforms exploded, reaching $157 billion in 24 hours, reflecting widespread panic selling.
The Fed dampens hopes for a monetary pivot
The second factor affecting prices comes from the monetary front. The latest statements by members of the Federal Reserve System suggest that key rates will be kept at their current levels for longer, contrary to market expectations that have been expecting a cut since the spring.
This perspective mechanically strengthens the dollar and bond yields, two variables traditionally negatively correlated with crypto-assets. The 10-year yield thus surpassed 4.5% this morning, the highest since 2007.
Crypto fund managers are therefore adjusting their positions in the face of this new paradigm of sustainably high rates, favoring short-term prudence.
In short, the current correction illustrates the crypto market’s continued sensitivity to traditional macroeconomic and political factors. Only a clarification of the electoral environment or a change in tone from the Fed could reverse this downward momentum in the coming weeks.
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I am passionate about Bitcoin, I love exploring the twists and turns of blockchain and cryptocurrencies and sharing my discoveries with the community. My dream is to live in a world where privacy and financial freedom are guaranteed for everyone, and I firmly believe that Bitcoin is the tool that can make this possible.
DISCLAIMER OF LIABILITY
The comments and opinions expressed in this article are solely those of the author and should not be considered investment advice. Before making any investment decision, do your own research.
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