Rate Cuts and the Election: How Will They Impact Bitcoin?
Recently, two key events are influencing the trajectory of cryptocurrencies: potential rate cuts and the upcoming U.S. presidential election. ![]()
These factors combined are creating uncertainty for Bitcoin, evident from the recent dip in trading volume and price fluctuations. It's clear that crypto investors are divided on these developments.
So, how will the interplay between rate cuts and the U.S. election impact Bitcoin? Is now the time to buy in, or is it safer to hold off? In this article, I’ll share my personal thoughts. Feel free to engage in the comments if you have differing views.
Jump to the sections that interest you:
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Will Bitcoin Enter a Bull Market with Rate Cuts?
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Trump vs. Harris: Who’s Better for Bitcoin?
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Three Scenarios for Bitcoin's Future & Current Investment Strategy
1. Will Bitcoin Enter a Bull Market with Rate Cuts?
First, let’s clarify what a rate cut is: it’s a reduction in the benchmark interest rate, which also lowers loan and deposit rates.
In my view, a rate cut is likely to trigger a Bitcoin rally, providing a good opportunity for gains. However, whether it will lead to a full-blown bull market remains to be seen.
The investment logic behind Bitcoin relies heavily on attention, the number of traders, and the volume of transactions. With more people trading, demand increases, driving prices up. Rate cuts generally favor a shift in capital toward higher-yield assets like stocks, mutual funds, and cryptocurrencies, which is a positive for Bitcoin.
Historically, Bitcoin has shown a negative correlation with U.S. interest rates—when rates drop, Bitcoin tends to rise.
Jump to the sections that interest you:
1. Will Bitcoin Enter a Bull Market with Rate Cuts?
First, let’s clarify what a rate cut is: it’s a reduction in the benchmark interest rate, which also lowers loan and deposit rates.
In my view, a rate cut is likely to trigger a Bitcoin rally, providing a good opportunity for gains. However, whether it will lead to a full-blown bull market remains to be seen.
The investment logic behind Bitcoin relies heavily on attention, the number of traders, and the volume of transactions. With more people trading, demand increases, driving prices up. Rate cuts generally favor a shift in capital toward higher-yield assets like stocks, mutual funds, and cryptocurrencies, which is a positive for Bitcoin.
Historically, Bitcoin has shown a negative correlation with U.S. interest rates—when rates drop, Bitcoin tends to rise.
The last rate cut cycle, around 2020, saw Bitcoin prices skyrocket.
From a sentiment perspective, the expectation of a rate cut can boost market liquidity and trigger optimism, potentially leading to a short-term surge in the crypto market.
However, Bitcoin’s market dynamics are complex and multifaceted. It’s not just interest rates that drive its price; other factors, such as mainstream acceptance of BTC, its inclusion in exchanges, and the launch of Bitcoin ETFs, also play significant roles.
So, while interest rates might push Bitcoin higher, whether it leads to a bull market will depend on broader public response and market expectations.
However, Bitcoin’s market dynamics are complex and multifaceted. It’s not just interest rates that drive its price; other factors, such as mainstream acceptance of BTC, its inclusion in exchanges, and the launch of Bitcoin ETFs, also play significant roles.
So, while interest rates might push Bitcoin higher, whether it leads to a bull market will depend on broader public response and market expectations.
2. U.S. Election: Which Candidate is Better for Bitcoin?
At this point, it seems Trump is the better bet. But to predict Bitcoin's price movement, it’s crucial to monitor Harris’s stance and actions closely.
As mentioned earlier, policy is a significant factor affecting Bitcoin. Therefore, having a president who is more supportive of Bitcoin could lead to favorable policies that boost its price.
Trump has been a strong advocate for Bitcoin, actively participating in Bitcoin-related events, and his retail site supports Bitcoin payments. He has even made bold promises, such as pledging to retain the government’s Bitcoin holdings if re-elected, positioning the U.S. as a leader in the crypto space.
Harris, on the other hand, has been more ambiguous. She has yet to publicly commit to supporting cryptocurrencies and may continue Biden’s strict regulatory approach.
While Harris’s team has engaged with crypto companies, this is likely a move to win votes. If Harris’s chances of winning increase, she might not need the backing of the crypto sector.
Currently, Bitcoin’s price is heavily influenced by Harris’s stance. For instance, on August 8, the “Harris on Crypto” campaign saw Bitcoin surge by over 10%, but when Harris didn’t attend a crypto roundtable and her chances of winning increased, Bitcoin fell back into a volatile state.![]()
Currently, Bitcoin’s price is heavily influenced by Harris’s stance. For instance, on August 8, the “Harris on Crypto” campaign saw Bitcoin surge by over 10%, but when Harris didn’t attend a crypto roundtable and her chances of winning increased, Bitcoin fell back into a volatile state.
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Therefore, it’s essential to keep an eye on the election and Harris’s position on Bitcoin.
3. How Should I Position Bitcoin Right Now?
As discussed, both rate cuts and the election will impact Bitcoin’s price.
A rate cut is a positive, and it’s almost certain to happen. The main uncertainty lies in the election. Here’s how I see the possible scenarios:
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Rate Cut + Trump Wins = Bitcoin Soars
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Rate Cut + Harris Changes Stance on Bitcoin = Double Boost, Bitcoin Could Skyrocket
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Rate Cut + Harris Maintains Stance + Harris Wins = Temporary Rise Followed by a Decline, Bitcoin Could Enter a Bear Market
As discussed, both rate cuts and the election will impact Bitcoin’s price.
A rate cut is a positive, and it’s almost certain to happen. The main uncertainty lies in the election. Here’s how I see the possible scenarios:
Scenario 1 is the most likely outcome; Scenario 2 is less probable but could result in a significant price increase, worth betting on; Scenario 3 is the riskiest, though it may offer short-term profit opportunities.
Given these scenarios, I’ve decided to invest cautiously.
Buying Strategy:
Since licensed platforms only support long positions, I’ve chosen to dollar-cost average my investments. With Bitcoin currently around 58,000 HKD, I’ll start with 1,000 HKD and reassess monthly based on the election and price trends.
Selling Strategy:
I’ll divide the 1,000 HKD into three parts:
Hold one-third until September-October; if Bitcoin rises above 66,000 HKD following the rate cut, I’ll sell.
Hold one-third until October-November; monitor the election and Harris’s stance on Bitcoin. If Harris is likely to win and her stance remains unchanged, I’ll sell. If she changes her stance, I’ll sell around 70,000 HKD.
Hold the final third until December-January 2025; by then, the election results should be clear. If the outlook is unfavorable, I’ll sell quickly. If stable, I’ll hold and wait for potential gains from new policies.
This strategy may not yield massive profits, but it should protect my principal. Bitcoin is a high-risk asset, so it’s crucial to manage position sizes, protect capital, and gain experience before aiming for bigger returns.
That’s my take on Bitcoin this week. I’d love to hear your thoughts in the comments!
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Disclaimer: Community is offered by Moomoo Technologies Inc. and is for educational purposes only.
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