Bitcoin surged close to the $70,000 mark on Monday, fueled by optimism surrounding the upcoming U.S. presidential election and strong inflows into exchange-traded funds (ETFs). The largest digital asset saw its price rise by 1%, briefly touching $68,252, before paring some of the gains in early New York trading. Smaller cryptocurrencies, including Ether and Solana, traded within narrow ranges, reflecting the cautious but bullish sentiment in the market.
According to data compiled by Bloomberg, U.S. spot-Bitcoin ETFs attracted nearly $2.4 billion in net inflows over the six days leading to October 18. This surge in demand is attributed to growing expectations that the regulatory landscape for cryptocurrencies will become more favorable after the November 5 presidential election. Republican candidate Donald Trump has signaled strong support for digital assets, which has led some traders to view Bitcoin as a "Trump trade." In contrast, Vice President Kamala Harris has also expressed a commitment to establishing a regulatory framework for the sector, promising a more structured environment compared to the perceived crackdown under President Biden's administration.
"The two key market trends are the elections and the global macroeconomic environment," said David Lawant, head of research at crypto prime broker FalconX. He noted that the Bitcoin options market indicates "forward implied volatility is heavily clustered around election day and somewhat subdued leading to it and some time after," signaling that investors are hedging for heightened price movements during this period.
Bitcoin's rally over the past week has been impressive, with the cryptocurrency gaining nearly 10% in the seven days through Sunday-its best weekly performance in over a month. ETF-driven demand has previously helped Bitcoin reach new highs, with the token last crossing the $70,000 threshold in June of this year.
The broader cryptocurrency market also benefited from Bitcoin's surge. Notably, Solana's SOL token rose by more than 7% amid a speculative frenzy driven by memecoins linked to artificial intelligence themes. Other major cryptocurrencies, such as Ether, Cardano, and XRP, saw gains of up to 4%, while popular memecoins like Dogecoin and Shiba Inu added roughly 3%. Among mid-cap assets, ApeCoin led the market with a 21% jump following the debut of its native blockchain network, ApeChain, which traders hope will boost usage.
The optimism in the crypto market is partly rooted in the upcoming U.S. elections. Many crypto traders see a potential Trump victory, along with a Republican sweep of the House and Senate, as a scenario that could pave the way for significant digital asset reform. "The most positive outcome for crypto would be a Trump win along with a Republican sweep, allowing the Trump-endorsed digital asset reform plans to have a realistic chance of passing through Congress," said Augustine Fan, head of insights at DeFi infrastructure firm SOFA.
At the same time, broader macroeconomic factors are contributing to the positive sentiment. Traders at Singapore-based QCP Capital highlighted that inflation in Japan remains subdued, leading to expectations that the Bank of Japan will maintain its current rate policy, which has contributed to a rally in USD/JPY. In China, recent rate cuts are seen as efforts to revive economic growth, and these moves are adding to a general risk-on sentiment in global financial markets.
"With U.S. equities close to all-time highs and the Japanese yen on a fresh weakening trend, risk-on sentiment will only grow stronger as we approach the U.S. election," QCP Capital traders said in a broadcast over the weekend. They added that the combination of favorable macroeconomic conditions and optimism about the election is propelling risk assets higher and supporting Bitcoin's historically bullish trend in October, often dubbed "Uptober."
In addition to ETF inflows, Bitcoin's recent price surge has been accompanied by a spike in open interest in futures contracts. Notional open interest in Bitcoin futures across all major exchanges reached $40.63 billion over the weekend, setting a record high. Cash-margin open interest also reached an all-time high, with the Chicago Mercantile Exchange (CME) accounting for 40% of the total. "The recent break of $68,000 was accompanied by about $2.4 billion in new BTC inflows over the past six sessions, which is a constructive indicator for new longs being established," noted Fan.
The influx of leveraged bets has contributed to increased volatility, which could result in more pronounced price swings as the market continues to react to macroeconomic events and election outcomes. A sudden spike in a key open interest ratio tracked by CryptoQuant from 0.20 to 0.21 indicates rising leveraged positions, signaling a heightened risk of market turbulence in the coming weeks.
