Bitcoin tops 80k as Republicans inch closer to a red wave

The Republican party is just 4 votes shy of the 218 required to take the house for a clean sweep. And that saw bitcoin futures top 80k with a $750 opening gap to kick off the week.

Bitcoin's Trump-pump is alive and well, with futures pricing gapping higher and above 80k for the first time in history. With Republican's on the cusp of taking the house to confirm a red wave in congress, it seems the crypto crowd are betting on digital-currency deregulation.

The gap higher was just under 5%, its third largest this year. But recent history shows that all of the larger gaps have closed eventually, although not necessarily quickly. But the contrarian within me is wondering whether bitcoin traders have got ahead of themselves, given the explosion of bullish bitcoin headlines today.

Besides, Bitcoin futures are trading in a very narrow range at its record highs following a large gap higher. With a lack of bullish follow-through, it looks like a $750 gap that wants to be filled, especially since Trump’s immediate attention appears to be on deportation, pardons, and the general deconstruction of Biden-era policies. This suggests that the gap higher could be blind optimism in the hopes he turns his attention to crypto.

Can bitcoin head for $100k?

The crypto space has been institutionalised for several years now, and that means it cannot escape its tight correlation with Wall Street. And as long as stocks retain their secular bull markets, it’s plausible to think Bitcoin could follow along for the ride and benefit from the ‘buy-the-dip’ mentality associated with stock traders. But that doesn’t mean it will be plain sailing along the way.

It is much easier for a whale to pump bitcoin prices than, say, S&P 500 futures. And that’s great bitcoin bulls of all sizes when prices go up. But problems arise when whales want to cash out and convert their oversized winnings to fiat. So while it shares a tighter correlation with appetite for risk these days, Bitcoin is still vulnerable to nasty selloffs along the way – which can be less kind to smaller pockets.

But if the Trump administration does deregulate crypto, it’s hard to see how it is not bullish for the sector. And if the Fed can steer the US economy away from a recession and stocks retain their bullish trajectory, 2025 could be another bright year for Bitcoin and, dare I say, 100k could be on the cards.

Bitcoin futures technical analysis:

The 4-hour chart better shows the eagerness of today’s gap. Yet volumes today are lower than on Friday and bullish momentum is already waning while prices grind their way to the monthly R2 pivot. As always, I remain dubious of bitcoin reaching record highs as it has a history of shakeouts under such conditions. Also note that bullish momentum on Wall Street indices is waning at their own record highs.

Bulls could wait to see if prices retrace within the gap before seeking evidence of a swing low and rejoining the trend, as not to chase the move on FOMO (fear of missing out).

-- Written by Matt Simpson

Follow Matt on Twitter @cLeverEdge