Bitcoin dropped 4.1% between Oct. 21 and 22 after facing resistance at $69,500. This correction wiped out the previous week’s gains, leading traders to question whether the $67,000 level can be reclaimed and what factors might support a price reversal.
The S&P 500’s decline since its all-time high on Oct. 18 likely pushed Bitcoin (BTC) investors to become more cautious. However, the main drivers behind the stock market pullback are mostly favorable for alternative assets. Gold, for instance, hit an all-time high on Oct. 22.
Bitcoin will benefit regardless of the US presidential election outcome
Billionaire hedge fund manager Paul Tudor Jones told CNBC on Oct. 22 that the US government will continue following an inflationary path “regardless of who lands in the White House.” Under this scenario, Tudor Jones recommends gold and Bitcoin, emphasizing that most investors are “ridiculously” underexposed to commodities.
Tudor Jones anticipates the US public deficit to exceed current budget projections, suggesting that yields on longer-term Treasurys will rise, as “the US will ultimately try to inflate its way out.” In this scenario, a stock market crash is not imminent, but the US dollar could face significant devaluation.
Although this isn’t the first time the founder of Tudor Investment has praised Bitcoin’s value, reaffirming his stance while BTC trades near $69,000 sends a notable signal. The sharp rise in the US 10-year Treasury yield reflects doubts about the Federal Reserve’s ability to achieve a “soft landing.”
US 10-year note yield (green) vs. Bitcoin/USD (blue). Source: TradingView
Even amid growing macroeconomic uncertainty, the fundamentals for a sustainable Bitcoin rally remain intact. For example, the increased demand for gold, despite tech companies reporting record earnings, highlights a lack of confidence in the stock market. Gold, traditionally viewed as a hedge, shares this key value proposition with Bitcoin.
While it is impossible to predict the outcome of the US presidential election, Kristin Smith, CEO of the Blockchain Association, believes the incoming US Congress will be the most crypto-friendly ever, citing “many first-time candidates coming in with positions on crypto.” Additionally, the number of lawmakers and policymakers open to discussing digital assets appears to be growing.
Bitcoin to benefit from hashrate growth and investors’ interest in alternative assets
The strong demand for Bitcoin exchange-traded funds (ETFs) further supports the likelihood of BTC reclaiming the $67,000 level. Since Oct. 11, these instruments have seen $2.68 billion in net inflows, pushing the assets under management in the ETFs to $51.7 billion, according to data from Farside Investors and CoinGlass.
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The ever-growing estimated Bitcoin hashrate, which measures the total processing capacity utilized by the network’s validators, signals that miners remain bullish in the mid- to long term.
Estimated Bitcoin network 7-day hashrate (TH/s). Source: Blockchain.com
A higher hashrate indicates significant investment in ASIC mining equipment, an operation that typically requires 18 months or longer to achieve profitability. With reduced short-term selling pressure from miners, it becomes easier for Bitcoin to reclaim its bullish momentum and establish $67,000 as a support level.
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.