Bitcoin traders weigh post-election rebound signals

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Bitcoin post-election rebound

Highlights

About 29,220 bitcoin-equivalent short positions on CME, worth roughly $2.2 billion, set stage for potential short squeeze amid post-election dynamics.
Large withdrawals of bitcoin from exchanges into self-custody reduce readily available supply, potentially bolstering prices if demand revives in coming months.
Prediction markets Polymarket and Kalshi highlight risk of Democrats controlling Congress, which could stall crypto legislation and increase digital asset volatility.

Positioning and on-chain signals in focus

As reported by CoinDesk, traders are watching roughly 29,220 bitcoin-equivalent short positions on CME, valued at about $2.2 billion, alongside $21.99 billion in short-side taker volume over a 24-hour period that Chris Sullivan, founder and CEO of Hyperion Decimus, had highlighted.

That positioning points to the possibility of a short squeeze, in which rising prices force bearish traders to cover positions and add momentum to a rally. Sullivan says the recent Binance hack makes those figures harder to interpret, but he also notes that large amounts of bitcoin have been withdrawn from exchanges into cold storage self-custody.

With fewer coins left on exchanges, the market may have less bitcoin readily available for sale if demand returns. Sullivan expects the withdrawals, together with the earlier short positioning, to support prices over the next several months, and he says the Crypto Fear and Greed Index and seller-exhaustion measures are showing patterns similar to the first pullback in a new bitcoin bull market.

Sullivan adds that confirmation still depends on the 200-day moving average holding during any additional short-term weakness. Updated futures positioning data due Tuesday is expected to offer a clearer view of trader exposure after the exchange withdrawals.

Election risks and longer-term industry support

Markets are also tracking the risk that Democrats could take control of both chambers of Congress, an outcome prediction markets Polymarket and Kalshi have placed in focus. Such a result would likely stall the Clarity Act and other crypto legislation, potentially adding another layer of volatility for digital assets.

Mark Connors, chief investment officer at Risk Dimensions, argues investors are spending too much time trying to trade the election outcome for a year-end bitcoin move. He says crypto adoption still has enough support from regulators and major financial firms to keep advancing even if Democrats win both chambers.

Connors points to investment in round-the-clock trading by Intercontinental Exchange, ICE, and Robinhood, as well as banks' efforts to build stablecoin payment systems. He also says crypto is holding up better than some traditional risk assets while technology stocks linked to artificial intelligence spending come under pressure, and he maintains a $180,000 bitcoin target for 2027 with a $500,000 base case for 2030.

In our earlier report on surging U.S. Treasury yields and the widening federal deficit, we noted that borrowing costs above 5% were tightening financial conditions through mortgages, federal interest expenses, and broader funding markets. The piece also highlighted how political gridlock ahead of the midterms complicates deficit reduction, increasing uncertainty for risk assets as investors demand higher compensation for long-duration exposure.

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