Bitcoin Fundamentals Remain Strong, Echoing Previous Election-Year Patterns: CryptoQuant Analysis

Bitcoin could be on the brink of a rally similar to those observed in prior election years, driven by solid fundamentals and a pattern aligned with previous U.S. presidential elections. Despite cautious market sentiment following the recent U.S. elections, CryptoQuant analysts highlight that Bitcoin remains fairly valued, not overvalued, presenting an opportunity for potential gains.

Bitcoin Exhibits Strong Valuation and Historical Resilience

CryptoQuant’s recent report underscores that Bitcoin’s current valuation is balanced, which could pave the way for a positive response to any favorable post-election catalysts. In prior U.S. elections—specifically 2012, 2016, and 2020—Bitcoin experienced impressive gains, surging by 22%, 37%, and 98% respectively from election days through year-end. In 2024, Bitcoin’s trajectory aligns closely with these historical trends, as it reached a new peak of $76,450 and maintains levels above $74,500, according to CoinMarketCap.
Just before the election results, Bitcoin hovered around $67,000, near its realized price—the average price paid by current holders—suggesting a fair valuation level. This pattern was similarly observed during the 2016 and 2020 election cycles. Furthermore, Bitcoin’s demand growth parallels previous election years; demand steadily increased from late September, with a monthly rise of 248,000 BTC, the strongest since April 2021. Such momentum historically signals a possible price rally.

Investors Watching Market Movements Amid Reduced Selling Pressure

CryptoQuant notes that Bitcoin’s weekend dip was not caused by heightened short activity, but by profit-taking following Bitcoin’s October surge of nearly 20%. This action led to a reduction of $4 billion in leveraged positions within the Bitcoin futures market. Currently, Bitcoin inflows to exchanges have significantly dropped, suggesting that market participants remain observant rather than bearish.
Compared to previous cycles, Bitcoin’s daily inflows to exchanges are now around 45,000 BTC, down from peaks of 95,000 BTC when the asset hit new highs earlier in the year. This lower influx signals investor caution, as evidenced by the ongoing negative Coinbase premium, reflecting measured activity as traders await a more definitive post-election boost for the market.

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