• Cryptos trade higher, driven by US equities
• Spot ETFs inflow confirm investors’ strong appetite
• US pre-election rhetoric supports cryptos
• Bitcoin breaks above its recent trading range

 Cryptocurrencies are in demand again

 The cryptocurrency market is enjoying a rather strong week with bitcoin climbing to the highest level since late July and trading around 35% higher from the August 5 trough.

 The current move comes amidst a mixed environment with the markets experiencing a strong dollar, which tends to reflect risk-off sentiment, and strong US equities, which is usually representative of risk-on momentum. At the moment, the latter is exerting a strong influence on cryptos, with the three-month correlation, using daily returns, rising to the highest level since February 2023, as seen in chart 1 below

This positive sentiment is also reflected in the recent net inflows in bitcoin spot ETFs, with a $1.2bn increase recorded since Friday, October 11, according to Coinglass. Following a weak period, the Assets under Management (AuM) of these ETFs have surpassed the $50bn level but remain quite far from the mid-March high of $63.5bn.

 The US presidential election is around the corner

 With the biggest event of 2024 being just three weeks away, the crypto market is on its toes. It is known that former president Trump is an avid supporter of cryptos. Regardless of whether he believes in cryptos or he just wants to attract votes from crypto holders, any positive commentary about regulation and the usage of cryptos in everyday life tends to boost cryptocurrency prices.

Unexpectedly, this week presidential candidate Harris tried to appease crypto holders. In a speech on Monday, Harris announced a ‘regulatory framework' to protect investors. While the details are still very sketchy, any initiative to boost the public’s awareness and confidence in cryptocurrencies would ultimately be very positive for the crypto world.

Interestingly, Trump’s potential win on November 5 was touted as the only outcome that would potentially benefit the crypto world. However, should Harris maintain the current positive rhetoric, cryptocurrencies could eventually enjoy a boost regardless of the November 5 winner.

Bullish sentiment is evident in technical analysis charts

Following almost a month of hovering inside the $60,000-$65,500 area, bitcoin has managed to stage a breakout, overcoming quite quickly the 23.6% Fibonacci retracement of the January 23, 2024 - March 14, 2024 uptrend. The next key resistance area is at the $69,000 level, which coincides with the late-July highs. Considering the bullish momentum indicators, a move above this key level could open the door to a retest of the March 14 highs. 

On the flip side, the path lower towards the key $60,300 level is full of strong support levels, including the 50- and 200-day simple moving averages (SMAs) at $63,252 and $60,953 respectively.