BTC supply squeeze and Biden: 5 things to watch in Bitcoin this week

Bitcoin (BTC) is starting what will be likely a hectic week for markets as the United States begins its two-month presidential transition.

After Joe Biden was declared the projected winner of the U.S. presidential elections during the weekend, Bitcoin fell, but managed to avoid major losses — what’s next?

Cointelegraph takes a look at the factors set to influence BTC price action over the coming week.

U.S. election frenzy starts to bite

Attention remains firmly fixed on Washington as the aftermath of a highly contentious election begins to play out.

Experts had warned that market volatility was all but guaranteed once the result was in. Since this occurred over the weekend, Monday’s Wall St. open will be a source of interest for market participants.

At press time, Japan was leading the gains, with its stock market hitting a 29-year high on what the press is calling the “Biden bounce.”

Bitcoin, on the other hand, has stopped short of continuing last week’s gains and at one point hit $14,400 — $1,590 off its recent peak. Since then, BTC/USD has rebounded considerably, circling $15,250 at press time Monday.

BTC/USD 1-week chart. Source: TradingView

Incumbent president Donald Trump has vowed to challenge vote counts and could yet cause further issues for Biden, leading to confusion over policy, which could yet rattle sentiment.

Zooming out, however, analysts frequently argue that in the long run, Bitcoin and gold as safe havens will ultimately win from the election, regardless of which candidate leads the U.S. going forward. The reason, among other things, is inflation.

As Cointelegraph reported, a speech last week by Jerome Powell, chair of the Federal Reserve, saw demands for further financial stimulus to enter the U.S. economy, raising debt and debasing the dollar.

“Bitcoin is the dominant crypto network – engineered to host the ideal safe haven asset & preserve monetary energy over long periods of time without power loss,” Michael Saylor, CEO of MicroStrategy, summarized in a tweet on Monday.

“That makes #BTC the solution to every investor’s store of value problem. Few understand this.”

Coronavirus mayhem throttles Europe

Accompanying the election fallout is the continued turmoil over nation states’ handling of the Coronavirus.

Europe and the U.S. have recently diverged in this respect, with the former succumbing to a wave of new lockdown measures that have met with considerable pushback from the population.

After showing off buoyant recovery statistics for Q3, many governments will soon be drawing another altogether less savory picture of their economies for Q4 as economic activity dives for a second time in 2020.

This opens up the possibility of history repeating itself for Bitcoiners. After March’s cross-asset crash and first lockdowns, Bitcoin bounced back from $3,600 to circle five figures in under two months.

As governments themselves repeated the controversial responses to the virus, analysts were already forecasting a strong year for Bitcoin in 2021. Among them, as Cointelegraph reported, Real Vision CEO Raoul Pal and Gemini exchange co-founder Tyler Winklevoss both predicted a new all-time high for BTC by Q1 next year.

Fear & Greed Index hits danger zone

In terms of current investor sentiment, however, warning bells are sounding as Bitcoin stays above $15,000.

According to the Crypto Fear & Greed Index, which measures market sentiment using a basket of factors, a correction is more than overdue.