Bitcoin rebounded sharply after an initial drop below $76,000, following the outcome of the U.S. midterm elections where Democrats secured majorities in both houses of Congress. As the election results became clearer, Bitcoin managed to overcome its losses and surged past the $78,020 mark. Meanwhile, Nasdaq futures saw an initial drop of over 2% but later recovered to just a 0.3% decline.
Market Buoyed by Decreased Political Uncertainty
Dick Lo, founder of TDX Strategies, attributed the early sell-off to the Democrats’ success in the elections and the subsequent buying spree to diminishing political uncertainty. With Democrats controlling Congress, the progress of crypto-friendly legislation like the CLARITY Act could hit a snag. Lo pointed out that having the White House and Congress in different parties’ hands makes significant policy shifts that might upset markets less likely.
Significant Bitcoin options trades on Paradigm stockpiled a notional volume that doubled the previous day’s on election day, reaching $660 million. Notably, these trades featured $420 million in call options contrasted by $105 million in put options, favoring gains if prices rose.
Impact of Binance Hack and ETF Outflows
Bitcoin’s value dipped to $75,736 on Binance‘s USDT market following a cyberattack that pre-dated the assault of October 28, marking a 6.9% decrease. Binance disclosed the attack affected ten blockchains, leading to a massive $6.3 billion loss. The platform has committed to covering the full loss with its user protection funds and own resources, beginning recovery of the stolen assets through market and over-the-counter purchases. The financial damage of this breach surpasses the 2019 hot wallet hack by a factor of 150. Back in 2019, Bitcoin rebounded by 142% within seven weeks, but this time it struggled to reclaim the $80,000 level despite post-election recovery.
Data from SoSoValue revealed $515 million in net outflows from U.S. spot Bitcoin ETFs throughout October, with the same amount exiting in the first two trading days of November. A negative trend in Coinbase’s premium indicator also pointed to weak demand. According to 21Shares, recovery hinges on Binance normalizing withdrawal functions, verifying reserves, and reversing net outflows from ETFs.
CryptoQuant analyst Darkfost noted that Bitcoin’s sell pressure indicator hit its lowest since the last bear market, albeit with limited new buying to sustain further growth. Markus Thielen, founder of 10x Research, anticipated an advance toward $82,000 based on daily momentum indicators. Conversely, Bitget Wallet research director Lacie Zhang emphasized that breaching the $80,000–$82,000 range would require stronger spot demand and institutional inflows.
As ETF outflows continue, Bitcoin’s ability to maintain a level above $78,000 suggests that buyers are counterbalancing the sales. Binance’s asset repurchases could bolster prices in the short term, while another shift to net ETF inflows might provide the additional demand necessary to push past the $80,000–$82,000 range.
