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The 2024 US presidential elections are decided. Donald Trump will win a second term, defeating Kamala Harris. In the middle of election night, the price of bitcoin rose to a new all-time high of $75,407 on Binance.
The euphoria is fueled by Trump's big electoral promises. He wants to establish bitcoin as a national strategic reserve, fire Securities and Exchange Commission (SEC) Chairman Gary Gensler, and generally enforce a cryptocurrency-friendly policy. While a Harris victory would have meant a short-term setback for bitcoin according to most experts, most experts' predictions are extremely optimistic thanks to Trump's victory.
However, renowned economist Henrik Zeberg offers a cautious outlook. Zeberg warns that Trump's proposed economic policies could precipitate a recession in the United States, leading to an “explosion” scenario for bitcoin and the broader crypto market. Central to their argument is Trump's plan to replace certain taxes with tariffs to stimulate domestic economic growth.
Is a bitcoin Explosion Top Scenario Looming?
Drawing parallels to historical events, Zeberg suggests that Trump's tariff strategy could reflect the economic mistakes of the 1920s and 1930s. In a post on x, he shared a link to the Wikipedia page on the Smoot-Hawley Tariff Act from 1930. x.com/HenrikZeberg/status/1854058948313153689″ target=”_blank” rel=”nofollow”>fixed: “Now everything is ready for history to repeat itself. “US tariffs were implemented in a recession, reinforcing the crisis and bursting the largest bubble in history.”
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The Smoot-Hawley Tariff Act is widely considered a catalyst that deepened the Great Depression. By substantially increasing U.S. tariffs on imported goods, the law triggered retaliatory tariffs from other nations, causing a severe contraction of international trade. This protectionist spiral exacerbated global economic decline, leading to increased unemployment and prolonged hardship around the world.
Amid these economic concerns, Zeberg has projected a significant, albeit potentially short-lived, rise in the price of bitcoin. “Making it simple! btc target is 115-123K,” he stated via x a few days ago. Their 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 1.618 Fibonacci extension, calculated at $114,916.16. He suggests that this level is “most likely the high,” indicating that bitcoin could reach this price before experiencing a significant reversal.
The analysis also points out other key Fibonacci levels that may serve as resistance points during bitcoin's rise. The 0.382 level at $77,437.88 marks significant initial resistance following the breakout of the previous all-time high.
The 0.618 level at $85,205.47 could act as minor resistance as the price rises. Furthermore, 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 excess beyond the main target zone.
A notation on Zeberg's chart begs the question: “58% in less than 3 months at the top?” This suggests that it anticipates a rapid price increase in a relatively short period of time, consistent with historical patterns.
At the time of publication, btc was trading at $73,742.
Featured image created with DALL.E, chart from TradingView.com
