November 12, 2024 (Globalinvestorideas.com Newswire) Globalinvestorideas.com, a go-to platform for big investing ideas releases market commentary from Hyblock Capital with market in-depth analysis of Bitcoin’s recent record-breaking price movements, bolstered by the crypto sector’s growing influence in the U.S. election cycle. Below is a summary of this week’s insights, prepared by Shubh Varma, CEO and Co-founder of Hyblock Capital.
Key highlights include:
- Crypto’s Growing Political Influence: In a historic shift, the U.S. crypto sector has invested over $238 million in the 2024 election cycle, surpassing traditional industries like oil and pharmaceuticals. This has already translated into a more favorable political environment for digital assets, with over 290 pro-crypto candidates in Congress.
- Market Sentiment and the “Trump Trade”: Bitcoin’s recent rally to an all-time high of $89,000 has been fueled by speculation that Trump’s re-election could lead to more favorable crypto policies, including the potential removal of SEC Chair Gary Gensler. The possibility of Bitcoin entering the U.S. strategic reserves has further spurred bullish sentiment.
- Fear & Greed Index Insights: The Fear & Greed Index has entered “extreme greed” territory, a signal that historically precedes either consolidation or minor pullbacks. However, parallels to the November 2020 bull run suggest that this period of extreme greed could be sustained for an extended time, providing continued upward momentum.
- Retail Positioning and Leverage Trends: Retail traders remain predominantly short, with only 40% of accounts currently long-a level that’s in the 20th percentile over the last 90 days. High open interest across exchanges, combined with retail short positioning, indicates the potential for further upward moves driven by short squeezes.
- Institutional Demand and ETF Inflows: Recent Bitcoin ETF inflows have hit record highs, signaling strong institutional interest. Coupled with Coinbase spot buying, this influx could sustain Bitcoin’s bullish trajectory despite the current consolidation phase.
Outlook for the Week: As the market navigates a mix of bullish signals and consolidation, traders should consider using pullbacks as entry opportunities while keeping an eye on metrics like leverage imbalances and retail positioning for signs of a local top. With U.S. elections approaching and crypto’s political influence growing, the long-term outlook for BTC remains strong.
Weekly Market Overview
The U.S. cryptocurrency sector is making history in the 2024 election cycle, investing over $238 million in political contributions-a figure that has outpaced traditional heavyweights like oil, pharmaceuticals, and even major Wall Street firms. This marks a significant milestone as digital assets emerge as a major financial force, not just in markets but now in political influence.
Of this investment, $181 million flowed through pro-crypto super PACs, while another $57 million went directly to individual candidates and their committees. Notably, prominent Bitcoin investor and Cantor Fitzgerald CEO Howard Lutnick, who has ties to Trump’s presidential transition team, donated at least $6 million to support the Republican candidate. Trump’s campaign, in turn, has committed to removing SEC Chair Gary Gensler, a figure widely criticized for his “regulation by enforcement” stance on digital assets.
The election cycle’s pro-crypto stance is already bearing results. With over 290 pro-crypto candidates now in Congress, the political climate is shifting.
This sentiment was underscored by Sherrod Brown’s recent loss to Bernie Moreno in Ohio, a strong message that opposition to crypto could now be a political liability.
As the House, Senate, and Executive lean Republican, the pathway to pro-crypto policy may be smoother than ever. Trump’s inner circle, which includes crypto advocates like JD Vance, Vivek Ramaswamy, and Lutnick, strengthens the sector’s support in key political spheres.
This political momentum has given rise to the so-called “Trump Trade,” with Bitcoin now reaching an all-time high of $89,000. Market sentiment is further bolstered by the possibility of Bitcoin entering the U.S. strategic reserves. If this were to happen, it could trigger significant demand as central banks, traditionally the biggest buyers of gold, consider diversifying into BTC. Such a shift could open the floodgates for institutional investment on a global scale.
With a bull market underway, Bitcoin’s potential upside is substantial.
One standout signal is the Fear & Greed Index, which has entered “extreme greed” territory. However, despite the largest green candle in bitcoins history, we only saw a move up of just +4 points from 76 to 80.
While this typically precedes consolidation or minor corrections in bull markets, a parallel can be drawn to November 2020, when the market sustained “extreme greed” levels for a remarkable 76 consecutive days. By contrast, such levels generally last only a few days, making the current period one to watch for potential greed.
Another notable metric is the True Retail Long percentage, which is unusually low at 40%, placing it in the 20th percentile over the past 90 days. In addition, Open Interest (OI), sits in the 99th percentile, suggesting that retail traders are primarily short, possibly providing fuel for further upward movement.
This dynamic echoes conditions from November 7, when True Retail Long percentage was even lower, in the 12th percentile, with OI similarly high. Historically, low retail long positioning amid high OI has often led to sharp upward moves as short positions get squeezed out.
On the Cumulative Volume Delta (CVD) front, the picture is mixed. Coinbase spot buyers emerged as significant players in this latest surge, alongside another notable ETF inflow day, signaling strong institutional demand. Currently, the market is in a consolidation phase, but with U.S. markets reopening, this could be short-lived.
Leverage data reveals that top traders continue to favor long positions, with the leverage delta between average longs and shorts again exceeding +10-a strong bullish indicator. Typically, this leverage pattern is seen after price declines, but this time, it’s emerging following a substantial price increase. This deviation could indicate sustained bullish momentum if long leverage continues to build in the wake of BTC’s recent surge.
As BTC enters consolidation, here are two key strategies for navigating this bull market:
- Use Pullbacks as Buying Opportunities – Given the strength of this rally, buying dips could offer favorable entry points.
- Monitor Metrics for Local Top Signals – Keep an eye on metrics like retail long positioning and leverage imbalances that may signal temporary peaks.
With BTC’s bull run gaining momentum, these insights will be crucial for positioning amid evolving market conditions. We’ll continue to analyze these shifts and monitor any indicators that suggest potential for further upside.
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