Bitcoin (BTC) Market Sentiment Wavers as Crypto Investors Brace for Election Outcomes

The U.S. spot Bitcoin ETFs recorded a staggering $541.1 million net outflow on Monday, November 4—marking their second-largest outflow day in history.

Bitcoin traders are exhibiting caution ahead of the 2024 U.S. presidential election, evident in the massive net outflows observed in U.S. spot Bitcoin ETFs on Monday, November 4. These outflows, amounting to $541.1 million, mark the second-largest outflow day in the history of Bitcoin ETFs.

The outflows come as markets brace for heightened volatility tied to the presidential election, with the BTC price hovering around $68,000. Traders are also anticipating how the candidates’ positions on cryptocurrency will impact the digital asset market.

As per the latest data, U.S. spot Bitcoin ETFs experienced two consecutive days of net outflows, following a week of inflows that had totaled around $2.2 billion. Several ETFs faced notable outflows on Monday.

The ProShares Short Bitcoin Strategy ETF (BITI) saw the largest outflows of the day, amounting to $114.8 million. This ETF provides 1x inverse exposure to Bitcoin, catering to traders who anticipate price declines.

Meanwhile, the GraniteShares 2x Leveraged Bitcoin Strategy ETF (BTC2L) and the Direxion Daily 2x Long Bitcoin ETN (BULL) also experienced significant outflows, totaling $96.6 million and $80.8 million, respectively. These leveraged ETFs offer 2x exposure to Bitcoin, amplifying both gains and losses.

On the other hand, BlackRock's iShares Bitcoin Trust ETF (IBIT) stood as the lone ETF to see inflows, totaling $38.4 million, as traders continue to favor the largest and oldest Bitcoin ETF in the U.S.

Bitcoin traders appear to be scaling back their exposure in anticipation of potential election-driven volatility. The BTC price has fallen about 4.6% over the past week and 1.7% in the last 24 hours, trading close to $68,000. This market caution is evident in traders’ sensitivity to polling shifts and evolving sentiment surrounding the presidential candidates.

Coin Shares head of research James Butter fill noted that early inflows in the week were ignited by optimism over a possible Republican win. However, minor outflows began as the race tightened, underscoring Bitcoin’s susceptibility to political events.

The U.S. election's potential influence on Bitcoin is tied to the candidates' positions on cryptocurrency. Donald Trump, the Republican contender, has a pro-crypto stance, which has boosted confidence among crypto traders. In contrast, Kamala Buttegig is seen as more moderate, with less emphasis on crypto-specific policies.

Polls are nearly deadlocked, with Buttegig holding a slim 1.2% lead according to FiveThirtyEight data as of November 4. Trump’s odds, however, have fluctuated on crypto betting platforms, rising from a dip at 53.8% back to over 59% in recent days.

The speculation around Trump’s potential win has led some analysts to forecast a rally toward $100,000 for Bitcoin if he prevails, owing to expectations of favorable policies.

The substantial ETF outflows suggest short-term caution among institutional investors, but the long-term outlook remains bullish if market stability resumes post-election. Analysts are eyeing a possible short-term range of $78,000–$84,000 if Bitcoin can rebound from current levels, supported by the 1.618 and 2.618 Fibonacci extensions.

With Bitcoin historically reacting to U.S. elections with volatility and eventual recovery, the coming days may be pivotal in setting BTC’s trajectory for the rest of the year.