It was a sea of red in the cryptocurrency market on Tuesday as investors positioned themselves for the US election and the Federal Reserve interest rate decision. Bitcoin fell to $67,900, while Solana (SOL), Popcat (POPCAT), and Mantra (OM) fell to $158, $1.2, and $1.28, respectively.
These were big reversals since Bitcoin peaked at $73,500, a few points below the all-time high of $73,800. Similarly, SOL peaked at $183, meaning that it has moved into a local correction after falling by 13%. POPCAT and OM have all corrected, falling by double digits from their highest levels this year.
Crypto fear and greed index falling
Bitcoin and other altcoins have suffered a harsh reversal in the past few days as a sense of fear starts creeping up in the market.
Data by CoinMarketCap shows that the crypto fear and greed index continued falling, reaching a low of 50 on Tuesday morning. This is a big drop considering that the index stood at the greed zone of over 66 last week.
This fear has come from the uncertainty surrounding the American election happening today, Tuesday, November 5.
Crypto has been a key part of the ongoing campaign period, with Donald Trump courting the industry. For example, he became the first presidential candidate to talk at a major Bitcoin conference.
If he wins, he will become the first American president to own cryptocurrencies, with Arkham estimating his crypto portfolio to be worth $6 million. JD Vance, his vice president, also owns some Bitcoin.
Kamala Harris, on the other hand, has largely avoided the crypto industry. Her most notable mention of crypto signaled that she would focus on regulations in a bid to ensure that the sector is stable.
Therefore, these coins have pulled back because it is unclear who will win. Official polls are all close, while Polymarket, Kalshi, and PredictIt are leaning towards Trump.
The market fears uncertainty, which also explains why most American equities dropped on Monday, with the Dow Jones falling by 257 points and the S&P 500 diving by 50 points.
Read more: Will Polymarket’s pro-Trump stance prove accurate? Founder Shayne Coplan weighs in
Bitcoin, Popcat, Solana, and Mantra outlooks
Our outlook for these coins is that their prices will bounce back regardless of who wins the election.
Besides, while the election is an important thing for the market this week, the reality is that it will stop mattering in the next few weeks.
For example, the approval of spot Bitcoin ETFs was a big story earlier this year, but its impact has faded in the past few months. Similarly, everyone was talking about the Bitcoin halving in April, but the talk has mostly ended.
Therefore, our view is that Bitcoin and other altcoins will bounce back if Trump wins the election and dive if Harris wins. A Trump win could push it higher than the all-time high of $73,800, while her win could see it drop to $60,000.
Bitcoin will then bounce back later this year since there is still strong demand for the coin. For one, data shows that spot Bitcoin ETFs have added over $23 billion in inflows this year, a trend that will continue.
These coins will also recover as the focus now shifts to the so-called Santa Claus rally, which happens ahead of Christmas.
Bitcoin, as shown below, has some positive technical catalysts, including the fact that it has formed a golden cross pattern as the 50-day and 200-day Weighted Moving Averages (WMA) have made a bullish crossover.
Bitcoin price chart by TradingView
These other altcoins like Solana, Mantra, and Popcat will also bounce back after the election since they have a close correlation with the US dollar.
Read more: Crypto prediction markets see Trump leading ahead of Harris on election eve
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