Crypto investment inflows surged to $2.2 billion last week, the highest since July 2023. Experts ascribe this growth to mounting optimism over a potential Republican win in the upcoming US elections.

This shift in political expectations has boosted both investor confidence and market prices.

Crypto Inflows at Multi-Month Highs Amid US Election Buzz

After recording $407 million in positive flows for the week ending October 11, digital asset investment inflows reached 2.2 billion last week. This represents a five times growth week-over-week, with Bitcoin seeing the largest inflows at $2.13 billion.

Positive flows into Ethereum reached $57.5 million. Meanwhile, multi-asset inflows interrupted their 17 consecutive week inflow streak to record $5.3 million in outflows.

Like the week before, CoinShares analysts ascribe the growing interest to the upcoming US elections, given that the US led the charge with inflows totaling $2.3 billion.

“We believe this renewed optimism stems from growing expectations of a Republican victory in the upcoming US elections, as they are generally viewed as more supportive of digital assets. This, in turn, has led to positive price momentum,” a paragraph in the report read.

Read more: How Can Blockchain Be Used for Voting in 2024?

According to CoinShares researchers, this highlights a growing interest in crypto investments within the country. It comes as the US election countdown continues, with only 15 days left. According to Polymarket, pro-crypto candidate Donald Trump is in the lead with a 22.9 percentage point difference against Kamala Harris.

With the Republican candidate generally perceived as being supportive of the cryptocurrency sector, the general sentiment is a potential Donald Trump victory could lead to more crypto-friendly regulations.

As BeInCrypto reported, the Republican presidential aspirant has plans to overhaul US crypto rules beyond Gary Gensler. This would fuel market growth further amidst beliefs that the party may introduce policies beneficial to the cryptocurrency industry.

As the countdown continues, investor interest in crypto is also growing. The report indicated a 30% increase in trading volumes in digital asset investment products last week. The uptick in trading activity, combined with rising asset prices, has brought total assets under management (AUM) in the digital asset space to nearly $100 billion.

If the current momentum continues, the market could soon cross this milestone. Crypto investment inflows could also increase this week compared to last week.

“A positive regulatory environment could open the floodgates for institutional investment. If the US sees a leadership shift that’s supportive of crypto innovation, it could lead to clear guidelines for crypto businesses, a potential green light for ETFs, and institutional confidence, leading to a wave of new capital into crypto markets,” an analyst wrote on X (formerly Twitter).

Read more: How To Buy Bitcoin (BTC) and Everything You Need To Know

Meanwhile, BeInCrypto data shows Bitcoin is eying the $70,000 psychological level, trading for $68,210 as of this writing.

The influence of US economic data on cryptocurrencies and Bitcoin (BTC) in particular continues to become apparent, as investors perceive the pioneer crypto as a flight to safety during times of economic uncertainty.

Therefore, crypto traders and investors must brace for possible impact, with three US macroeconomic data releases this week likely to influence volatility for digital assets.

Initial Jobless Claims

Amidst concerns of climate-related catastrophes, unemployment figures have been explosive in October, recording levels last since August 2023. This data, recoding weekly unemployment figures for the week ending October 19, is due for release on Thursday. It will show the number of people who filed for unemployment last week.

With a median forecast of 250,000 on MarketWatch, these unemployment figures are expected to be high amidst storm damages and labor stoppages. Specifically, economists’ consensus estimate is that the initial jobless claims will come in elevated at around 245,000. This is because some residents were still without power last week in states affected by Hurricanes.

A higher-than-expected unemployment figure could indicate a weakening job market in the aftermath of these natural disasters. It may also affect sentiment toward the Fed’s rate plan. The agency has a dual mandate—to achieve price stability and maximum employment. Fed officials recently said they would prioritize the labor market due to inflation cooling.

Read more: How to Protect Yourself From Inflation Using Cryptocurrency.

Therefore, higher jobless claims could renew hopes for a larger interest rate cut, possibly supporting Bitcoin.  On the other hand, a lower-than-expected number of jobless claims could indicate a strengthening economy. This would boost investor confidence and potentially drive up demand for riskier assets like Bitcoin.

US Manufacturing PMI

This data, due for release on Thursday, October 24, will provide insights into the health of the manufacturing sector. As one of the interest rate-sensitive sectors, the manufacturing industry may be poised to benefit from the easing cycle. Economists forecast recovery in manufacturing, boosting earnings growth for the S&P 500 into 2025.

However, with a previous reading of 47.3, the manufacturing PMI is expected to rise slightly to 47.5. Nevertheless, anything below 50 indicates a contraction in manufacturing and a negative outlook for manufacturers. The index has been negative for 22 of the last 23 months, indicating a longer negative streak than the great recession of 08- 09.

A PMI reading above 50 would suggest expansion in the manufacturing sector, which could be interpreted as positive for the overall economy. This could lead to increased interest in cryptocurrencies as a hedge against inflation.

US Services PMI

Like the Manufacturing PMI, the Services Purchasing Managers’ Index (PMI) will also provide insights into the health of the services sector. The Services PMI is expected to dip slightly to 55 after a previous reading of 55.2.

Given crypto’s blossoming relationship with macroeconomic trends, investors will be closely monitoring these economic indicators for clues on future price movements. A positive outcome from the jobless claims and PMI data could bolster sentiment and fuel further upside in Bitcoin and other digital assets.

Nevertheless, this week on the US economic data calendar is rather quiet, with all the above macro reports coming in on the same day. Against this backdrop, Neil Sethi, Managing Partner at Sethi Associates, urges investors to take advantage of the light releases this week as next week could bring even more volatility.

“Do note, what this week lacks in key reports next week makes up for and then some. We will get all of the key October employment reports, including the first read on Q3 GDP & ECI (plus Sept personal income and spending with PCE prices). This is on top of most of the Magnificent 7 earnings, the Treasury borrowing announcement, etc. So take full advantage of the light week,” Sethi wrote.

Read more: How To Buy Bitcoin (BTC) and Everything You Need To Know

BeInCrypto data shows Bitcoin is trading for $69,026 as of this writing, up by a modest 1.15% since Monday’s session opened.

Following a market rebound on Friday, Bitcoin (BTC)  has since shown little price movement gaining by only 0.42% in the last day. The premier cryptocurrency currently hovers around $63,000 as investors continue to await the traditional bullish surge of  “Uptober”.  Commenting on BTC’s potential next movement, CryptoQuant analyst ShayanBTC has highlighted key price levels investors should look out for.

Bitcoin Must Overcome Major Resistance To Prevent Crash To $55,000 

In a Quictake post on Saturday, ShayanBTC shared key insights on the relationship between Bitcoin’s Realized Price Unspent Transaction Output (UTXO) Age Bands and potential market trends. Generally, the Realized Price UTXO Age Bands is an on-chain metric that provides insights into Bitcoin holders’ behavior. Specifically, it reveals the average price at which certain categories of BTC investors acquired their tokens.

According to ShayanBTC, the realized price for short-term holders of Bitcoin i.e. holders of BTC for three to six months, currently lies at $64,000 while long-term holders of Bitcoin i.e. for 6-12 months presently have a realized price of $55,000. The analyst explains that realized price levels usually serve as strong support as key support or resistance levels in the BTC market. This is usually because they represent the average cost basis for Bitcoin holders and often form psychological price points.

Based on BTC’s current price of around $63,000, the short-term holders’ realized price of $64,000 presents a pivotal resistance level, a triumphant breakout above which signals would indicate the continuation of the asset’s present upward trajectory. However, if BTC fails to break past $64,000 perhaps due to increased selling activity or macroeconomic factors, Shayan expects the asset to fall to around $55,000 i.e. the realized price level for long-term holders. 

Interestingly, Shayan’s observations are well reflected on Bitcoin’s daily chart where the premier cryptocurrency has consistently oscillated between $55,000 – $65,000 over the last two months. Should BTC break out of this range-bound pattern, it will need to surpass the resistance at $70,000, which could signal the start of a market bull run.

BTC Network Fees Up By 32%

In other news,  Bitcoin recorded $5 million in network fees, representing a 32.4% rise over the last week. According to on-chain analytics company, IntoTheBlock, this development indicates a heightened network activity despite calming market volatility.

At the time of writing, the crypto market leader trades at $62,786 reflecting gains of 2.13% and 9.08% in the last seven and thirty days respectively. Meanwhile, BTC’s daily trading volume is currently valued at $17.57 billion, following a 42.92% decline.

Featured image from The Economic Times, chart from Tradingview