Bitcoin is back up again. At the time of writing, the price of the world’s number one cryptocurrency by market cap has surged more than $300, and it is now trading for just over $11,700, marking the highest it’s been in several weeks.
Bitcoin May Be Facing Some Trouble Soon
The currency has been on a roll ever since October came about, and analysts are excited to see the currency make another attempt at gloriously reaching $12,000. While it’s still a few hundred dollars off the mark, things should ultimately prove positive granted the asset can maintain its present momentum.
But it’s not all rainbows and roses for the world’s primary form of crypto. According to some analysts, the stock market is highly vulnerable as of late thanks to the oncoming US presidential election, which is set to occur roughly two weeks from now. The stock market always shows high volatility during election times, and as it turns out, bitcoin’s correlation with stocks appears to be getting thicker.
If the stock market sinks following the election, bitcoin could easily follow suit, which means that there’s a chance we may see bitcoin’s now rock-solid price burst into flames. A tweet issued by Weiss Ratings says the following:
We’ve noticed a high correlation of #BTC to equity markets. This is bad, because currently – due to the US election rapidly approaching – the stock market has a lot of headline risk, and correlation transfers all that needless volatility to #Bitcoin.
It is widely whispered that bitcoin and stocks are correlated, though how much so has been open to interpretation. In fact, some have claimed that bitcoin is more closely correlated to gold, and that if there is a specific stock that bitcoin is strongly attached to, it’s Tesla. Still, analysts are claiming that things may not go over well.
At the same time, however, one can also assume that this volatility may be a good thing considering bitcoin could shoot up rather than fall into oblivion. For example, in 2016 – when President Donald Trump was first elected to the White House – the price of bitcoin rose past $1,000 for the first time in roughly three years. The currency’s movement suggested that the economy would potentially improve under Trump’s leadership, and there’s no denying that this could potentially happen again.
Volatility May Not Be a Bad Thing
After all, many market analysts have been bearish when it comes to the thought of a Biden presidency. They’ve commented that Biden would not be a markets-friendly president, which could potentially send shockwaves through the stock world and through national equities that could make 401Ks go down overnight.
Bitcoin is recovering from a rough and lowly September, which saw the currency trading in the low $10,000 range (nearly $2,000 less than where it was during the previous month).