Bitcoin (BTC) price gained 3.2% between Oct. 27 and Oct. 28, briefly testing the $69,200 level for the first time in a week. Although the rally encountered some resistance, Bitcoin bulls believe the conditions for a sustained uptrend are in place, especially given the latest socio-political and economic developments.
US 6-month Treasury yield (left) vs. oil WTI/USD (right). Source: TradingView
To start the week, oil prices declined by over 5.5% on Oct. 28 after the ongoing conflict in the Middle East failed to impact energy production or transportation channels. Israel launched attacks on Iran over the weekend; however, no oil or nuclear facilities were targeted, as reported by CNBC.
Traders who initially turned to oil as a hedge against Middle East tensions might now explore alternative protective assets, as regional uncertainty persists. According to CNBC, Israel and Iran have been engaged in a "shadow war" for over a year, though US officials have cautioned Israel against targeting nuclear sites in Iran.
Will uncertainty benefit Bitcoin price?
Inflation remains a key concern that could drive traditional finance investors toward alternative assets. While higher prices may support corporate earnings in the short term, continuous inflation eventually pressures consumers to reduce spending.
Corporate earnings often reflect past consumer demand, creating a “lag effect,” as companies report results from prior quarters, which may mask the real-time impact of inflation on spending trends.
The next US inflation report is due on Oct. 31, followed by the Federal Open Market Committee meeting on Nov. 7. Analysts project a 0.3% increase in the Core Personal Consumption Expenditures (PCE) index for September, compared to a 0.1% rise in August. Both the PCE index and labor market data are among the Fed’s preferred indicators for policy decisions.
US Personal Consumption Expenditures Index. Source: Federal Reserve
According to Wil Stith, bond portfolio manager for Wilmington Trust, "I think they (the FOMC) could debate pausing since they cut by 50 basis points before." Even if most of the market expects additional interest rate cuts, the primary risk currently is a conservative Federal Reserve opting to pause rate adjustments to better gauge the risks of overheating the economy.
Additionally, with the US presidential elections now less than 10 days away, investors tend to be more risk-averse, leaning toward cash and short-term government bonds to mitigate potential surprises. History has shown that polls can sometimes be off the mark, which keeps everyone on edge.
Regardless of which candidate wins, the reduction in uncertainty post-election could prompt inflows into risk-on assets, including Bitcoin. From a socio-political perspective, the conditions appear supportive of a sustainable Bitcoin rally, though some factors do pose risks, leading traders to potentially hold off on more significant bullish moves.
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One must also consider that higher-than-expected inflation, which reduces the odds of further central bank stimulus, highlights Bitcoin’s fixed and predictable monetary policy. Additionally, a win by US presidential candidate Kamala Harris might not yield immediate effects on digital assets, though it could indicate a more transparent approach to crypto regulation.
Thus, even if Bitcoin doesn’t achieve a new all-time high in 2024, there are reasons to expect that early 2025 will remain favorable for price appreciation.
This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.