Bitcoin surge fuelled by Donald Trump's campaign promises is unsustainable, analysts say

How far could former President Donald Trump's crypto-friendly campaign pledges boost Bitcoin? Markus Thielen, founder of 10x Research, wrote that it is unlikely, noting that any rally likely to be driven by the Republican presidential nominee's support for crypto could ultimately be thwarted by other market factors.

Bitcoin rose 4% over the weekend, but there are still signs that a combination of political and market factors could keep it from surging. temporary. Latest report10x Research noted that Bitcoin is “significantly oversold” and that all three technical reversal indicators have turned bullish.

Seelen noted that the expected delay in approval of an Ethereum ETF for spot trading until around July 8, as well as President Biden’s performance during the presidential debate, may have contributed to the rally.

A big driver of Bitcoin's recent performance is political, he writes. President Biden's decision not to step down and allow other Democratic candidates to run against President Trump marked an unexpected turn of events in the electoral landscape.

“Biden's family is reportedly supporting his candidacy for reelection,” Seelen wrote, “as are all Republicans, given Biden's slim chances of beating Trump in November's election.”

The political landscape is even more complicated: Polls suggest that even if Biden were to drop out, other Democratic candidates, such as California Gov. Gavin Newsom, would likely struggle to beat Trump. Although Trump is a controversial figure, he remains a strong candidate in Thielen's view.

“While Trump is not the ideal choice for many Americans, he is the only viable option (for now) and is popular enough to win the election,” Seelen suggested.

According to the 10x report, Biden's confirmation after consulting with his family over the weekend was a key factor in Bitcoin's recent surge, but the report urged caution: July typically sees positive performance for Bitcoin, but August and September often see a weaker trend.

“Despite the weekend surge, investors should be wary that Bitcoin could fall to as low as $55,000 in the coming weeks,” the report warned.

Technical indicators also support this caution, with Bitcoin’s 21-day moving average at $63,750 and a moving stop at $68,900. The key support range of $61,500 to $61,800 is being closely monitored. External factors also pose risks. Bitcoin mining operations, particularly in Texas, face challenges from high summer temperatures that could lead to business interruptions.

Last year, shares of major miners such as Marathon Digital and Riot fell sharply in July, and a similar trend could be seen this year, which could lead to increased selling pressure as miners may need to raise funds for their operations. Additionally, Bitcoin balances on exchanges are increasing, indicating a possible sell-off.

“In many cases, rising balances on exchanges indicate a willingness to sell them once Bitcoin breaks through stops or reaches a level high enough to lock in profits,” Thielen explained in the report.

This could be the reason for the sharp price fluctuations over the weekend. Liquidity indicators also signal caution, with Circle's USDC stablecoin seeing heavy outflows, signaling a shift from crypto to fiat.

Additionally, inconsistencies in ETF flow data raise questions about market trends. For example, The Far Side reports that BlackRock has accumulated $17.7 billion in IBIT since January, but BlackRock claims the figure is $18.4 billion, highlighting data inconsistencies.

10x Research believes that a possible second term for President Trump would be positive for Bitcoin, even if a short-term rally over the next few weeks may not be sustainable for BTC price action.

“It's certainly a good thing that Trump is leading in the polls,” Seelen wrote, “and if he wins the election, which seems likely, it would also be good for bitcoin and the industry.”

Editor: Andrew Hayward