Oct 23 2024: Bitcoin’s price declined on Wednesday as risk appetite weakened, driven by uncertainties surrounding the U.S. presidential election and expectations of smaller interest rate cuts from the Federal Reserve.
The world’s leading cryptocurrency dropped 0.5% to $67,161.7 by 01:02 ET (05:02 GMT), after struggling to break past the $70,000 level earlier in the week.
Broader global stock market declines mirrored this lack of risk appetite, while the upcoming expiration of roughly $4 billion in Bitcoin options is expected to fuel greater market volatility in the coming days.
Election Uncertainty Pressures Bitcoin Prices
Recent polls and prediction markets show Republican nominee Donald Trump gaining momentum over Democratic candidate Kamala Harris in the 2024 presidential race. However, the contest remains too close to call, with two weeks left before Election Day.
While initial optimism surrounding Trump’s pro-crypto stance had boosted Bitcoin prices, this enthusiasm has waned as the election approaches. Trump has promised to implement crypto-friendly regulations if elected, while Harris has also vowed to introduce a regulatory framework for cryptocurrencies.
Rate Hike Concerns Weigh on Crypto as Dollar Strengthens
Crypto markets faced additional pressure from a stronger U.S. dollar, as expectations of slower interest rate cuts by the Federal Reserve pushed the dollar to near three-month highs.
Traders are now anticipating a smaller rate cut of 25 basis points in November, and are positioning for a higher terminal rate. These expectations have driven U.S. Treasury yields higher, reducing liquidity available for speculative assets like cryptocurrencies. Higher interest rates typically dampen investment in riskier sectors, including crypto.
Broader Crypto Market Declines: Altcoins Follow Bitcoin’s Lead
Altcoins mirrored Bitcoin’s weakness on Wednesday. Ether, the second-largest cryptocurrency, fell 1.4% to $2,610.01. It is expected to face increased volatility as approximately $1 billion in Ether options are set to expire this week.
Other altcoins like XRP, SOL, MATIC, and ADA declined between 0.4% and 3%, while meme coin DOGE dropped 4.7%.
