A surge in cryptocurrency prices quickly reversed during the U.S. afternoon hours as traders grew increasingly nervous ahead of the final stretch of the U.S. presidential election.
Bitcoin (BTC) spiked to $70,500 earlier in the day from around $67,000, before shedding 2% in just one hour to briefly dip below $69,000. It was trading at $69,000 at press time, still up more than 2% over the past 24 hours. Meanwhile, the broad-market CoinDesk 20 Index posted a 3% gain during the same period, driven by strong performances from native tokens such as Near (NEAR), Aptos (APT), and Hedera (HBAR), which each advanced 6%-7%.
Ether (ETH) continued its underperformance relative to Bitcoin, with the ETH/BTC ratio falling below 0.035 for the first time since April 2021. ETH saw only a modest 0.4% daily gain, while Litecoin (LTC) remained largely unchanged.
The abrupt selloff coincided with a sharp 20% drop in Trump Media & Technology Group (DJT) stock, which briefly halted trading on Tuesday afternoon. While no clear catalyst was identified for the decline, the odds of Trump winning the election had only slightly decreased to 61% from 62% on blockchain-based prediction platform Polymarket. Traders likely took profits after DJT shares had surged 18% earlier in the day, continuing a strong rally that has seen them rise 178% from September lows.
Despite the volatility, Bitcoin continues to trade within a narrow range just below its all-time high as election night approaches, adding to the uncertainty surrounding crypto prices.
In a Monday market update, digital asset hedge fund QCP predicted that Bitcoin prices would likely remain volatile until more clarity emerges on the election results. A Trump victory could lead to an immediate price surge, while a Kamala Harris win might prompt the opposite reaction.
Bohan Jiang, head of OTC options trading at Abra, warned of the worst-case scenario for risk assets, including cryptocurrencies: a delayed or contested election, similar to the 2000 election, which could lead to weeks of uncertainty. Such a situation, he said, would likely trigger a sell-off in risk assets and cause ongoing volatility until the election outcome is fully resolved.
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