Gushiken Yona
President Joe Biden’s unexpected withdrawal from the 2024 presidential race sends shockwaves through the financial world, triggering a dramatic drop in cryptocurrency values.
In a surprise move, U.S. President Joe Biden announced his withdrawal from the race via social media on Sunday. This unexpected decision sent shockwaves through the crypto market, already jittery due to the administration’s tough stance and recent regulatory crackdowns.
Biden’s administration has led a campaign to rein in the crypto industry, with the SEC implementing strict measures against several businesses and personalities. This aggressive approach had already created uncertainty and volatility in the market, but Biden’s withdrawal has further exacerbated these conditions.
The Tail-Wagging Why: The news of Biden’s exit from the race created a ripple effect, stirring panic among investors. Analysts quickly weighed in on the potential implications for the cryptocurrency market. Noelle Acheson, author of the Crypto is Macro Now newsletter, highlighted that the sudden drop in Bitcoin was linked to the higher probability of Biden’s replacement defeating Trump in November, which she believes is less favorable for crypto overall. Lark Davis, founder of Wealth Mastery, explained that the market had already priced in a Trump victory, and the uncertainty of his new opponent led to the correction. “Funny how markets work,” Davis remarked, encapsulating the unexpected market dynamics triggered by political shifts.
Beyond The Bark: Santiment, a blockchain analytics firm, drew parallels between the current market reaction and the one observed two weeks prior following the attempted assassination of former President Trump. Both events led to a temporary dip in crypto prices, followed by a swift recovery. Santiment highlighted that the social volume around major political events continues to demonstrate fragile correlations with cryptocurrency prices, driven largely by speculation and investor sentiment. This highlights the volatile nature of the market, where investor reactions to political news can result in significant price movements.
Sniffing The Numbers: The liquidation of leveraged positions underscores the high-risk nature of trading in the cryptocurrency market. Between 5:30 pm and 6:00 pm UTC on July 21, the market saw significant volatility, with both long and short positions facing heavy losses. According to CoinGlass, traders who were caught off guard by the sudden price movements experienced losses ranging from $34 million to $65,880, emphasizing the need for cautious trading strategies in such a dynamic market. The rapid recovery of Bitcoin to a 24-hour high demonstrates the market’s resilience but also the inherent risks of speculative trading.
The Caveat: Despite the initial turmoil, the quick recovery of Bitcoin and other cryptocurrencies suggests a resilient market. However, experts advise investors to temper their excitement and remain vigilant. Caitlyn Long, CEO and founder of Custodia Bank, warned that investors should not expect any immediate improvement in US crypto policy, noting that Biden wasn’t in charge of it.
She emphasized that Senator Elizabeth Warren’s influence over financial service agency appointees might lead to even harsher crackdowns on cryptocurrency. “DO NOT EXPECT any immediate improvement in US #crypto policy,” Long cautioned, highlighting the complexities of the regulatory landscape.
Santiment’s analysis points out that while the market’s reaction to political news can be swift and significant, it is also unpredictable. The intertwined nature of politics and market sentiment means that traders must navigate a landscape where news can have immediate and far-reaching impacts on asset prices. As the political landscape evolves with Biden’s endorsement of Kamala Harris or other potential candidates, the cryptocurrency market is likely to experience further fluctuations. Investors are encouraged to stay informed and consider the broader economic and regulatory context when making investment decisions.
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Yona has no crypto positions and does not hold any crypto assets. This article is provided for informational purposes only and should not be construed as financial advice. The Shib Daily is an official media and publication of the Shiba Inu cryptocurrency project. Readers are encouraged to conduct their own research and consult with a qualified financial adviser before making any investment decisions.
