Bitcoin Shows Strong Fundamentals, Follows Patterns Seen in Previous Elections: CryptoQuant

Although crypto investors are still on the sidelines due to the just-concluded United States presidential elections, CryptoQuant analysts say Bitcoin is showing strong fundamentals and follows a bullish pattern seen in previous U.S. elections.

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According to a weekly report, one positive fundamental from a valuation perspective is that BTC is currently fairly valued and not overvalued. This means that a positive catalyst stemming from the elections could trigger a major rally in the asset’s price.

Bitcoin’s Fundamentals Are Strong

Following the last three U.S. presidential elections in 2012, 2016, and 2020, BTC surged 22%, 37%, and 98% from the election days to the end of each year. So far, in 2024, BTC has recorded a similar performance. The crypto asset has already surpassed its former all-time high (ATH) of $73,750 to hit a new high of $76,450. At press time, BTC was above $74,500, per data from CoinMarketCap.

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A few hours before the election results were announced, BTC was worth approximately $67,000, just above its realized price, the average price paid for all current holders. This was evidence that BTC was fairly valued, and the situation was seen before the last elections in 2016 and 2020.

Interestingly, Bitcoin’s apparent demand is growing at a pace witnessed before the last election. In 2016, BTC demand declined until the last week of November, when it experienced a strong recovery. Contrarily, demand grew strongly in 2020 and continued till the end of the year. For 2024, the metric has been positive since late September and is now increasing at 248,000 BTC monthly, the fastest since April 21. This type of growth often precedes significant rallies.

Investors Still Observing the Market

CryptoQuant further noted that BTC’s decline over the weekend was unrelated to traders shorting the asset but to market participants taking profit after the cryptocurrency’s 20% rise in October. The profit-taking wiped about $4 billion of employ from the Bitcoin futures market.

As the market awaits a post-election catalyst to stir things up significantly, BTC traders appear to be exerting less selling pressure, as seen in fewer assets moving into centralized exchanges.

During the last presidential election, daily BTC inflows to exchanges hovered around 73,000 BTC. When BTC hit a new high earlier this year, the figure was around 95,000 BTC; however, the inflows have fallen to 45,000 BTC currently. This shows that investors are still observing the market, an indication substantiated by the Coinbase premium sitting in negative territory.