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05.11.202010:52 Forex Analysis & Reviews: Investing in bitcoin could be risky

Over this year, bitcoin has risen in price so much that the average trader earned about 115% of the profit. In October, the cryptocurrency advanced by 28% to $13,500. On October 31, bitcoin set a new annual record of $14,100, but quickly lost 4.3%.

Analysts are confident that bitcoin is overbought now. If traders start taking profits and selling coins, bitcoin will lose in value. However, there is another reason for the decline. The Relative Strength Index dropped below 50 points. In other words, the uptrend will soon replace the downtrend.

Therefore, bitcoin may soon fall to $13,000, according to analysts. The fall could be prevented by the support levels of $13,400 and $13,320. To enter the growth phase, the cryptocurrency must overcome the resistance level of $13,700.

However, not all analysts are so pessimistic. Some of them believe that bitcoin will rise above $14,000 and possibly set a new annual high. But at first, it needs to break the resistance level of $13,670. Otherwise, bitcoin will continue falling to the nearest support level of $12,840, in the worst case, to $11,900.

Analysts warn that the cryptocurrency market will be extremely volatile due to the US presidential elections. Earlier, experts warned of a possible drop in the cryptocurrency rate to $12,000 amid this event.

By the way, how will the US presidential elections affect the cryptocurrency market?

Passions run high, financial markets are awaiting the results of the voting. Joe Biden and Donald Trump are practically on a par. The election results may affect quotes in different ways.

If Trump remains in the presidency, then either the cryptocurrency will rush up, or the market will stagnate. If Biden wins, the market will begin to show negative dynamic, as experts suggest.

Trump's policy is predictable, but Biden's is still unknown. It is unclear whether he continues to stimulate the economy or not. Now the cryptocurrency market is bullish. However, it is very easy to get burned.

Experts believe that for both Trump and Biden, the country's economic recovery is a priority now. In other words, money injections into the economy will continue. This means that the US dollar may go on depreciating, and the crypto market will grow.

The main factor for the cryptocurrencies' growth is the movement of the US stock market, and it will rise due to the liquidity injections, regardless of Trump's or Biden's victory in the elections.

In 2020, the first cryptocurrency rose by 73% amid economic and geopolitical uncertainties. The coronavirus pandemic has put pressure on risky assets and positively affected the value of defensive assets like gold and bitcoin. Both of these assets have set historic highs.

Another important factor behind bitcoin's growth is the policies of central banks that are forced to print money to save economies. The unprecedented printing has led to the depreciation of many currencies, including the US dollar. The US dollar index lost 4% in 2020.

Experts warned that volatility is expected in the market in the near future, so investing in cryptocurrency is very risky now

Kate Smirnova,
Analytical expert of InstaSpot
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