Analysing the Trump Pump: Bitcoin Absorbs $3B of Sell-side Pressure
We live in uncertain, and politically dominated times. Amidst some truly historical events, Bitcoin has calmly absorbed over $3B in sell-side pressure, before launching back above $63k.
"There are decades where nothing happens; and there are weeks where decades happen" —Vladimir Lenin
We are undoubtedly living through a period of history.
On Saturday 12th July, my co-founder and I were immersed within the remarkable halls of the LBJ Library Museum in Austin, Texas. We were engrossed with panels, documents, and artefacts which described the tumultuous time that was the 1960s and 70s in America.
Almost at the exact moment we were reading about the assassination of JFK, and of Martin Luther King, several shots were fired at former President Trump during his speech at a Pennsylvania rally.
This of course comes after several weeks of political struggle with current administration, as confidence in President Biden continues to slide. According to punters betting via Polymarket, Trump is now the clear favourite in the presidential race.
Now as an Australian, I am simply a spectator in this US election, and this post will not focus on the politics of the situation. However, I do believe it important to consider the following idea when trying to understand the markets reaction.
We are in a world that is likely to be heavily dictated by politics in the months and years ahead. Whether we frame it as a ‘fourth turning’, or a ‘long-term debt cycle’, political dominance is characterised by periods where uncertainty dominates market outcomes.
Markets can rally on bad news, and sell-off on good news. The nature of the news is oftentimes not the issue being reflected in the price.
Instead, markets tend to respond badly to uncertainty, and positively to reduced uncertainty. With the events of this weekend, I believe the market is up due to a perception of less uncertainty in the outcome of the American political race.
Investors can now start to position themselves accordingly, and price in their expectations. I had a quick read through the draft platform document of the Republican party, and was somewhat taken aback by the direct call for rights to mine Bitcoin, rights for self-custody, and the freedom to transact without surveillance and control. I also note the pro-energy-abundance, which is of course directly linked to Bitcoin and AI.
All in all, if the election odds on Polymarket are even remotely close to the outcome, and if the politicians work to deliver what they say here (holds breath…), I suspect this weekends rally partially a response to this reduction of uncertainty.
Now of course, we can trust a politician as far as we can throw them.
What we can trust is the immutable database that is Bitcoin itself.
It is both easy and natural to get swept up with excitement during a rally like this one, succumb to the FOMO, and lose sight of the underlying market dynamics.
So lets leave the political quagmire behind, and dive into the onchain and market data to see if this rally really has the legs to take Bitcoin higher.
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Disclaimer: This article is general in nature, and is for informational, and entertainment purposes only, and it shall not be relied upon for any investment or financial decisions.