Bitcoin rebounds as post-election optimism and falling Oil prices support risk-on sentiment

The crypto market is showing a strong recovery alongside US stocks, supported by a sharp decline in crude oil, lower US Treasury yields, and a weaker US dollar. Following the US midterm elections, investors are increasingly betting that a Democratic sweep of Congress could accelerate efforts to bring the Iran conflict to an end. This is easing concerns about potential supply disruptions and putting additional pressure on oil prices.

At the same time, US Treasuries are extending their gains for a second consecutive day, as lower oil prices could help contain inflationary pressures and limit further fiscal spending. This is pushing 10-year Treasury yields lower and weighing on the US dollar, creating a more supportive environment for risk-on assets, including stocks, cryptocurrencies, and precious metals.

Looking back at our October 22 crypto market update, we already highlighted the potential for a deeper ABC correction, warning that the recovery in wave (B) could become more complex before another decline in wave (C). Bitcoin subsequently moved lower into the projected corrective support area, reaching the 38.2%–50% Fibonacci retracement and our previously highlighted $76K–$74K support zone. Check it here.

From an Elliott Wave perspective, Bitcoin is now bouncing nicely from this area, suggesting that the projected ABC slowdown within wave (4) could be nearing completion. However, bulls still need to reclaim the channel resistance line and the $84K area to strengthen the case for another advance in wave (5). Alternatively, a break below $74K would increase the risk that the larger five-wave impulse is already complete, opening the door to a deeper correction.

For now, the reaction from support is encouraging, but the $84K resistance area remains the key level to watch for confirmation of a stronger bullish recovery.