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The 2024 US presidential election has been decided. Donald Trump wins a second term and defeats Kamala Harris. In the middle of election night, the Bitcoin price on Binance rose to a new all-time high of $75,407.
The euphoria is driven by Trump’s big election promises. He wants to make Bitcoin a national strategic asset, fire Securities and Exchange Commission (SEC) Chairman Gary Gensler, and generally enforce crypto-friendly policies. While a Harris victory would have been a short-term setback for Bitcoin according to most experts, the majority of experts’ predictions are extremely optimistic thanks to Trump’s victory.
However, noted economist Henrik Zeberg offers a cautionary perspective. Zeberg warns that Trump’s proposed economic policies could trigger a recession in the US, leading to a “blow-off top” scenario for Bitcoin and the broader crypto market. Central to his argument is Trump’s plan to replace certain taxes with tariffs to stimulate domestic economic growth.
Is a Bitcoin Blow-Off Top Scenario Coming?
Drawing parallels to historical events, Zeberg suggests that Trump’s tariff strategy could reflect the economic missteps of the 1920s and 1930s. In a post on declared: “Now everything is ready for history to repeat itself. US tariffs have caused a recession, deepening the recession and bursting the largest bubble ever.”
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The Smoot-Hawley Tariff Act is widely regarded as a catalyst that deepened the Great Depression. By substantially increasing U.S. tariffs on imported goods, the law prompted retaliatory tariffs from other countries, leading to a severe contraction in international trade. This protectionist spiral has exacerbated global economic decline, resulting in higher unemployment and prolonged hardship worldwide.
Amid these economic concerns, Zeberg has predicted a significant, but potentially short-lived, rise in Bitcoin’s price. “Make it simple! BTC target 115-123K,” he claimed a few days ago via X. His analysis is based on Fibonacci extension levels – a technical analysis tool used to predict future price movements based on historical price patterns.
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According to Zeberg’s analysis, the critical level to monitor is the Fibonacci extension of 1.618, calculated at $114,916.16. He suggests that this level is “very likely the top,” indicating that Bitcoin could reach this price point before a significant reversal occurs.
The analysis also points to other key Fibonacci levels that could serve as resistance points during Bitcoin’s rise. The 0.382 level at $77,437.88 marks significant initial resistance after breaking the previous all-time high.
The 0.618 level at $85,205.47 could act as minor resistance as the price rises. Moreover, the 1.0 level at $107,435.71 represents a crucial psychological and technical threshold, while the 1.27 level at $123,148.19 indicates a possible overshoot outside the primary target zone.
An annotation on Zeberg’s graph asks the question: “58% in the top in less than 3 months?” This suggests that he expects a rapid price increase within a relatively short time frame, consistent with historical patterns.
At the time of writing, BTC was trading at $73,742.
Featured image created with DALL.E, chart from TradingView.com