Technical analysis of Bitcoin trend after Trump's attack

The gunfire last weekend not only shocked the world, but is also bound to cause a wave of turmoil in the cryptocurrency market.

As the picture of Trump being shot in the ear spread across social networks in an instant, the ripple effect it caused has just begun to spread across the global financial market. In this article, Bitkoala Finance will analyze the trend of Bitcoin after Trump's attack.

Is the Asian session significantly affected?

After the weekend's rise, Bitcoin has broken through the downward trend line since June and re-stood on the 20-day moving average. At the same time, it also broke through the previous low position in June. This triple breakthrough indicates that the trend of turning up in the short term has been established. The resistance that needs to be overcome in the short term includes the consolidation range of $61,460 at the end of June. If it is effectively broken through, it will be expected to return to the vicinity of $64,000 and challenge the medium- and long-term 50 and 100-day moving averages.

Before the full opening of Asian stock markets on Monday, the most obvious reflection was in the US dollar basket index and Bitcoin.

The logic behind the rise of the US dollar is that the price of US bonds has fallen due to Trump's advocacy of loose fiscal policies, which has kept bond yields rising, benefiting the US dollar and putting pressure on other currencies, especially the RMB, which may face an escalation of the trade war. On the other hand, Bitcoin has climbed more than 5% in the past two days, rising to more than 60,000 US dollars, mainly benefiting from Trump's friendly stance on cryptocurrencies.

In addition, assets that may also benefit include safe-haven assets such as gold and silver. These assets often become safe havens for funds when the overall environment is more turbulent and uncertain.

From the perspective of the stock market, Trump's tenure has been a more obvious boost to US stocks (see the figure below), which may benefit from his tax cuts to stimulate the economy and protectionism towards the US economy. In contrast, the boost to Asian stock markets is not so obvious, and the performance is not much different from that during Biden's tenure.

From the perspective of sectors, due to Trump's past policies, the market generally believes that the financial sector, energy sector and medical sector may benefit, while the green energy sector may be under pressure.

After the Asian session on Monday, Bitcoin broke through $62,000/coin, up about 2% on the day, and Ethereum broke through $3,300/coin, up 1.72% on the day, both rising to their highest levels since early July. Trump's defiant response to the assassination attempt has fueled speculation that the cryptocurrency-supporting former president's chances of winning reelection have climbed.

What impact will the Trump attack have on the Bitcoin market?

The news of Trump's attack may have short-term and medium-term impacts on the Bitcoin market. Although the cryptocurrency market has a low correlation with traditional financial markets, major events and global uncertainties may still cause market volatility. Here are several possible influencing factors:

1. Market risk aversion

Short-term volatility: Sudden events usually trigger risk aversion in the market. Investors may turn to assets that are considered safer, such as gold and Bitcoin, leading to a short-term rise in Bitcoin prices.

Increased uncertainty: If the event triggers greater economic instability, investors may pay more attention to cryptocurrencies as safe-haven assets, which may further push up Bitcoin prices.

2. Market sentiment and speculative behavior

Sentimental fluctuations: Rapid changes in market sentiment may lead to sharp fluctuations in Bitcoin prices. Investors' panic or optimism may cause prices to fluctuate sharply in a short period of time.

Speculative behavior: Some investors may take advantage of market uncertainty to engage in short-term speculation, increasing market volatility.

3. Global macroeconomic factors

Monetary policy: If the event leads to loose monetary policies (such as interest rate cuts or quantitative easing) in major economies around the world, this may increase the attractiveness of Bitcoin as an anti-inflation asset.

Recession expectations: If the event leads to increased market expectations of a global recession, investors may look for diversified portfolios, including Bitcoin.

Summary

Currently, a key question for global markets is whether the so-called "Trump trade" will gain momentum, with the argument that Trump's return to the White House will bring tax cuts, higher tariffs and less regulation.

Trump has also increasingly embraced the cryptocurrency industry in an effort to win over voters. Last week, organizers of a Bitcoin conference to be held in Nashville, Tennessee on July 27 said he would speak at the event. Tony Sycamore, a market analyst at IG Australia Pty, wrote in a note that the failed assassination attempt increased the likelihood of Trump's reelection, and that bitcoin "gained momentum" as a result. Bitcoin's supporters argue that it can serve as a store of value and a hedge against political turmoil, but that claim is controversial given its inherent volatility. The cryptocurrency industry is trying to support candidates seen as favorable to digital assets, including by making large donations to the Fairshake political action committee. The industry has become an influential player in the 2024 election, in part to fight back against a regulatory crackdown led by the U.S. Securities and Exchange Commission (SEC).

Finally, it is worth mentioning that Geoffrey Kendrick, head of foreign exchange and digital asset research at Standard Chartered Bank, analyzed that because Trump is friendlier to Bitcoin regulation and mining than Biden. As Trump's chances of being elected increase, it is expected that Bitcoin will rise to $100,000 in the November election and $200,000 by the end of next year.

I hope so!