On Wednesday afternoon, Bitcoin’s price stabilized near the $80,000 mark, reflecting an increase of approximately 3% for the day and indicating a decline of about $26,000 compared to its value one year prior. This movement occurred as market participants overcame initial apprehensions following the Democratic sweep in Congress, as reported by Bitcoin Magazine Pro.

At 3:12 p.m. ET, Bitcoin was trading at $80,099, with a market capitalization estimated at $1.61 trillion and a trading volume of approximately $39.6 billion over the preceding 24 hours.

The lowest price point was recorded during the 10 p.m. ET hour on Tuesday, coinciding with the emergence of results indicating a Democratic takeover of both chambers. Conversely, the highest price was noted in the 10 a.m. hour on Wednesday, representing a fluctuation of about 7.3% within a span of roughly 12 hours.

This upward momentum was primarily attributed to a short squeeze, during which approximately $950 million in leveraged crypto positions were liquidated over 24 hours; $560 million of these liquidations were attributed to bearish positions. Notably, Bitcoin’s short positions represented $403 million of this total, making up 76% of the overall short liquidations.

Ki Young Ju, CEO of CryptoQuant, noted on X that a substantial $215 million in Bitcoin shorts were liquidated within a single hour, highlighting the rapid shift in market dynamics.

Analysts largely concur that the preceding sell-off had already impacted the market. James Butterfill, head of research at CoinShares, emphasized that the apprehensions surrounding the Democratic sweep had been factored into Bitcoin’s price prior to the election, thus paving the way for a relief rally once the uncertainty subsided.

Ram Ahluwalia, CEO of Lumida, echoed this sentiment during a podcast interview conducted the day before the election, predicting that a Democratic sweep would result in a “one and done washout, which resets asset prices.”

Stocks, Oil, and a Weaker Dollar

The surge in Bitcoin’s price was part of a broader financial market rally. The Dow Jones Industrial Average rose approximately 1,500 points, or 3%, on Wednesday afternoon, while the S&P 500 and Nasdaq Composite experienced gains of 1.7% and 1.8%, respectively. Notable tech giants, Apple and Microsoft, reached record highs during this trading session.

Oil prices exhibited significant volatility, with Brent crude experiencing a decline of over 9%, dropping to $93.91 per barrel, and West Texas Intermediate decreasing nearly 9% to $87.59 by 12:36 p.m. ET, as reported by CNBC. This downturn followed Vice President JD Vance’s assertion that Republican losses were attributable to the ongoing conflict in Iran.

“The reason we lost is the war,” Vance stated on X, an observation that carries implications for Bitcoin’s price trajectory. Elevated crude prices above $100 have been associated with persistent inflationary pressures, prompting the Federal Reserve to adopt a cautious stance concerning potential interest rate hikes in December. Additionally, the U.S. dollar index fell 0.55% to 101.32, marking its lowest level since October 1.

What Lies Ahead for Bitcoin’s Price

Despite the price increase, demand from institutional funds has not kept pace. U.S. spot Bitcoin ETFs reported outflows amounting to $115.6 million on Tuesday, marking their third consecutive session of withdrawals. Notably, BlackRock’s IBIT fund experienced a loss of $95 million. Over the last three days, total outflows reached approximately $1.16 billion, with flows for Wednesday to be reported following the U.S. market close.

The regulatory landscape appears to be more challenging for the cryptocurrency sector. Jaret Seiberg of TD Cowen remarked that the Democratic sweep complicates the prospects for a crypto-backed CLARITY Act, as oversight committees governing cryptocurrencies will transition to Democratic control in January.

On-chain analysts are characterizing the current price movement as a retest of key levels. According to Glassnode’s Week on Chain report, Bitcoin is currently testing levels it surpassed in August, with the True Market Mean at $77,700 and the short-term holder cost basis at $75,700. Maintaining prices above these thresholds is considered essential to sustaining the upward trend initiated in August.

Looking ahead, market participants can expect a series of pivotal dates. The October jobs report will be released on Friday, followed by the October Consumer Price Index on November 10, and the Federal Reserve’s next decision is anticipated on December 9. Bitcoin’s price remains approximately 36% lower than its all-time high near $126,080.

The crucial test remains whether ETF investors will return to support the price trajectory following the liquidation of short positions. As of the present moment, Bitcoin’s price hovers around $80,200.

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