October 2024 Crypto Market Analysis: Week 3Â
Bitcoin Surges Amid U.S. Election Hopes
Bitcoin's price rose on Wednesday, October 16th, inching closer to a new all-time high. This surge is driven by positive sentiment around the upcoming U.S. elections, where both leading candidates—Kamala Harris and Donald Trump—have expressed crypto-friendly views.
As of mid-October, Bitcoin is trading at $67,099, buoyed by hopes of favorable regulations and improving capital inflows.
U.S. Elections and Crypto-Friendly Stances
Kamala Harris, the Democratic candidate, pledged to introduce a definitive regulatory framework for cryptocurrencies, a move welcomed by the crypto community. On the Republican side, Donald Trump continues to support the sector, with his World Liberty Financial crypto project raising $220 million this week alone. As the presidential race tightens, many are speculating that a Trump victory could further boost the crypto market.
Mt Gox and Capital Inflows Impact Market Sentiment
Adding to the positive market mood, defunct exchange Mt Gox extended its timeline to return stolen tokens to creditors, which contributed to Bitcoin’s upward momentum.
Additionally, data from CoinShares revealed that crypto investment products saw weekly inflows of $407 million by mid-October, primarily focused on Bitcoin. Speculation about a Trump victory appears to be a major driver behind these inflows.
While Bitcoin has been steadily rising, major altcoins have been less fortunate. Ether, for example, only posted a 0.8% gain, trading at $2,616.78. This highlights a trend of mixed performance across the crypto space, where Bitcoin is seeing significantly more momentum than its counterparts.
U.S. Interest Rates and Capital Flow Implications
As expectations around the Federal Reserve’s interest rate cuts grow, assets denominated in U.S. dollars, including Bitcoin, have surged. The Nasdaq has also hit a three-month high, while Bitcoin is nearing its historical peak. The outcome of the U.S. elections is expected to influence global risk appetite, further shaping capital flows and geopolitical risk factors.
Venture Capital Activity in Crypto: 2024 Trends
Despite a quiet year for venture capital, there are signs of renewed activity in the crypto space. The third quarter saw a 20% drop in investments compared to the previous quarter, totaling $2.4 billion across 478 deals. However, early-stage investments dominate, accounting for 85% of the total. Late-stage investments remain sluggish, but the upcoming quarters are expected to see more activity, driven by regulatory clarity and lower interest rates.
U.S. Dominates the Crypto Venture Scene
The United States continues to be the leader in crypto venture capital, contributing 56% of the total investment and 44% of the deals. While 2024 is expected to be the weakest year for crypto fundraising since 2020, there are signs of recovery, particularly in early-stage projects. Notably, funding for AI-related crypto startups increased fivefold in October, reflecting a growing trend towards artificial intelligence integration in the sector.
Bitcoin ETF Launches and Market Dynamics
The launch of Bitcoin ETFs has put pressure on the primary market, particularly for late-stage companies struggling to raise funds. However, early-stage ventures remain resilient, with valuations recovering in the second half of the year. As institutional investors continue to pour money into the space, the primary market correlation with Bitcoin prices appears to be breaking down.
Open Interest in Bitcoin Contracts at Record Levels
Open interest in Bitcoin contracts reached $38.353 billion by mid-October, nearing the historical peak of $39.031 billion set earlier this year. The majority of this growth is being driven by the CME platform, where open positions rose by nearly 6% in the last 24 hours, compared to a slight decline on Binance.
Conclusion: Optimism Amid Uncertainty
October 2024 has been a pivotal month for crypto markets. Bitcoin is on the verge of breaking historical highs, buoyed by U.S. election optimism and regulatory clarity. While altcoins lag behind, Bitcoin's momentum continues to drive the broader market. With venture capital expected to pick up and institutional interest growing, the next few months could present significant opportunities for investors.