Markets Brace For Volatility Amid US Presidential Election And Fed Rate Decision: This Week In Crypto

The crypto market is entering a highly volatile week, with two major events poised to shape the direction of digital assets in the near term. 

Following a Bitcoin-powered rally last week, the market has seen a retreat over the weekend. Meanwhile, traders are bracing for more turbulence. 

This week’s key drivers include the US Presidential Election and the Federal Reserve’s policy meeting. Both of these have significant implications for the crypto industry.

Explore: Why is Crypto Down? Will Bitcoin Recover and Break 70K?

Donald Trump: A Bullish Signal for Crypto?

Kamala Harris: A Bearish Outlook?

The US Presidential Election, scheduled for Tuesday, 5 November 2024, is one of the most anticipated events in the global financial markets, including cryptocurrencies.

The outcome of this election is expected to have far-reaching consequences for the crypto industry.

Trump, who has been dubbed the “crypto candidate,” has made several pro-crypto promises during his campaign. He has pledged to establish a strategic Bitcoin reserve and ensure that the US leads in global crypto adoption. A Trump victory is seen as a bullish factor for the crypto market, with many in the industry expecting his policies to foster a more favorable regulatory environment for digital assets.

On the other hand, Harris’ potential win is viewed with more skepticism by crypto enthusiasts. The Biden-Harris administration has sent mixed signals regarding its stance on cryptocurrencies during its tenure, leading to uncertainty about how future policies may impact the industry. A Harris victory could introduce regulatory headwinds that may dampen market sentiment.

The election’s outcome will not only influence short-term price movements. It has the potential to shape the long-term regulatory landscape for cryptocurrencies in the US, which remains one of the largest markets for digital assets.

Related: Bitcoin Whales Playing Safe Ahead of Donald Trump vs. Kamala Harris Showdown

Federal Reserve Policy Meeting: Interest Rate Cut Expected

"The Fed is mandate consistent on both employment and #inflation which means they should have a neutral interest rate, which I think is at least 150 [basis points] below where they are," says former PIMCO chief economist Paul McCulley. pic.twitter.com/yHv61HOGbj

— CNBCOvertime (@CNBCOvertime) November 1, 2024

In addition to the US election, another critical event this week is the Federal Reserve’s policy meeting on Thursday, 7 November 2024. 

Analysts overwhelmingly expect a 0.25 basis point rate cut, with a 98% probability according to CME Fed Watch tool estimates. 

The Fed’s interest rate decisions are closely watched by crypto investors because of their direct impact on liquidity and inflation expectations.

When borrowing costs are reduced, investors often seek higher returns in alternative assets such as Bitcoin and other digital currencies. Moreover, this has been evident in previous rate cuts when crypto markets experienced upward momentum.

Other Economic Indicators Adding To Crypto Volatility

In addition to these two major events, several other economic reports are expected this week that could further contribute to market volatility:

• ISM Non-Manufacturing PMI, Tuesday, 5 November 2024  

This report provides insights into business conditions in the US services sector and serves as a leading economic indicator. A strong PMI reading could signal economic resilience, potentially boosting investor confidence across all asset classes, including crypto.

• Initial Jobless Claims, Thursday, 7 November 2024

The state of labor markets remains a critical factor in assessing overall economic health. Higher-than-expected jobless claims could indicate economic weakness and may lead investors to seek safer assets like gold or Bitcoin.

• Michigan Consumer Sentiment Index, Friday, 8 November 2024 

This survey measures consumer confidence levels and inflation expectations. If consumers express concerns about rising inflation or economic uncertainty, it could drive more interest in Bitcoin as an inflation hedge.