According to CryptoQuant, a blockchain analytics firm, U.S.-based Bitcoin investors remained passive on the election day that determined the new U.S. president. This inactivity reflects the broader trends in Bitcoin trading and investor behavior during significant political events.
As the world watched with bated breath during the U.S. election day, another interesting phenomenon was taking place in the world of cryptocurrency. CryptoQuant, a leading analytics platform, released a report on the trends surrounding Bitcoin during this crucial period. This article will delve into the key findings of the report and provide insights into the impact of the election on the cryptocurrency market.
Negative Trend in Bitcoin Premium
The Coinbase Bitcoin premium is calculated by determining the percentage difference in Bitcoin prices between the exchanges Coinbase Pro and Binance. According to CryptoQuant data, this premium has remained negative for the past 32 days. On October 24, the premium rose to -0.2% but stabilized at -0.06% during the election hour, indicating that BTC demand in the U.S. is lower compared to global demand.
CryptoQuant noted that price increases for Bitcoin generally last longer when the premium is positive. “Typically, when the Coinbase premium is positive and maintains that positivity, Bitcoin rises sustainably, indicating strong demand in the U.S.” – CryptoQuant.
Decline in ETF Investment Flows
The negative trend in the Bitcoin premium coincides with daily net flows to spot Bitcoin ETFs hitting a six-month low. According to SoSoValue data, the daily net flow was -541 million dollars on Monday, suggesting that investors exited ETFs before the election.
Additionally, it was noted that the selling pressure on BTC has decreased. The amount of tokens transferred to exchanges by investors and traders has diminished, with daily exchange inflows now hovering around 45,000 BTC, a significant drop from the 95,000 BTC in March and 73,000 BTC before the 2020 election.
Bitcoin Price Performance
On Tuesday, the BTC price on Coinbase increased by approximately 2.7%, rising above $70,500 from $68,249. According to TradingView data, in the last three U.S. presidential elections, Bitcoin prices experienced significant increases between election day and year-end. CryptoQuant reported that BTC rose by 98% in 2020, 37% in 2016, and 22% in 2012.
Recent developments in the Bitcoin market illustrate how investor behavior shapes during election periods and how market dynamics can be influenced. The negative premium on Coinbase points to a decline in demand in the U.S. market, while the strong fundamental indicators of BTC could yield positive long-term effects.
Conclusion
The CryptoQuant report sheds light on the Bitcoin trends observed during the U.S. election day. The negative premium on Coinbase suggests a decrease in BTC demand in the U.S., while the decline in ETF investment flows indicates investor caution. However, it is worth noting that historical data shows a potential for significant price increases in the months following the election.
As the cryptocurrency market continues to evolve, it is essential for investors to stay informed about the latest trends and developments. Keeping an eye on reports like CryptoQuant's can provide valuable insights and help make informed investment decisions. Whether you're a seasoned crypto enthusiast or a novice investor, understanding the dynamics of the market is crucial for success.
So, will Bitcoin experience another surge in the wake of the U.S. election? Only time will tell. Stay tuned to stay ahead of the curve in the exciting world of crypto.