The markets are controlled by bears ahead of the US presidential elections. Bitcoin act as a risky asset amid global turmoil. The markets will calm down once the elections are over. Traditional markets have already hit the panic button amid the lingering economic uncertainty on top of the upcoming second wave of COVID-19 and the Presidential elections in the US. Investors are bracing for the worst and prefer to sell everything for cash, distorting common correlations, and market reactions to the risk-on/risk-off environment. Spiraling down on the pre-election drama Despite a recovery attempt from deeply oversold levels, the global stock markets are still on track to have their first bearish monthly close since March, while gold is trading below $1,900 for the first time since the beginning of August. Investors desperately need some positive economic news and less dovish commentaries from Fed officials to decide whether the stocks reached the floor in September and may be ready for a sustainable recovery. Federal Reserve Chairman Jerome Powell and other policymakers speak later in Washington and may provide the markets with the breathing space. However, the analysts warn that the turbulence will be violent until the US presidential elections are over. Bitcoin and gold correlation Bitcoin is often regarded as a safe-haven asset and a hedge against inflation, positively correlated with gold. However, this statement works only when investors seek to protect their wealth from devaluation and other economic risks. Meanwhile, the escalating geopolitical tensions and growing global uncertainties move Bitcoin to the camp of risk assets and make it correlated with stocks. Now investors have plenty of reasons to panic: Europe is on the verge of a new lockdown, with 40,000 to 50,000 new coronavirus cases registered daily. Some countries have already imposed restrictions, while Britain is considering the full-fledged quarantine again. The US is in total turmoil ahead of the election. The death of Supreme Court Justice Ruth Bader Ginsburg added fuel to the presidential election fight between President Donald Trump and nominee Joe Biden as the Senate controlled by the Republicans seems to be eager to push through another Justice before the elections. The conflict between China and the US is raging on as the Chinese state media denounced the TikTok deal as “an American trap” and a “dirty and underhanded trick.” The Volatility Index (VIX) that measures implied volatility in the S&P 500 went wild, rising above $30 for the second time in September. The index usually goes that high during the shocking events like wars and terrorist attacks and trades under $20 when everything is calm. It rose above $30 for the second time this month as the markets continue to plunge. During times of calm, the VIX index usually trades under $20, while $30 acts as the upper limit for world-shocking events like wars or terrorist attacks. CBOE VIX index Source: TradingView Where from here Considering the above, Bitcoin may be vulnerable for further sell-off as long as the markets are plagued by high volatility and uncertainty levels. The pioneer digital asset will go down amid the flight to fiat across the board and start recovering once things calm down. As Charles Edwards from Capriole Fund mentioned in the recent tweet, Bitcoin tends to be volatile ahead of the US elections and calm down afterward. The time of panic distorts the correlation patterns, meaning that the parallels between Bitcoin and gold, stocks, or any other assets are pointless. The market sells everything to get cash as the most liquid asset and the primary medium of exchange. The advantages of digital money over fiat may be obvious, but cash is still the king in the short run. From the technical point of view, BTC/USD needs to regain ground above $11,000 to gain the upside momentum and retest the next psychological Barrier of $12,000. Meanwhile, a failure to stay above $10,400 will bring more sellers to the market and allow for a deeper correction with the first focus on $10,000 and $9,800. Get more details on the technical outlook in our article. FX Street FX Street FXStreet is the leading independent portal dedicated to the Foreign Exchange (Forex) market. It was launched in 2000 and the portal has always been proud of their unyielding commitment to provide objective and unbiased information, to enable their users to take better and more confident decisions. View All Post By FX Street Crypto News share Read Next GBP/USD holds steady near 200-day SMA, comfortably above 1.2700 mark FX Street 2 years The markets are controlled by bears ahead of the US presidential elections. Bitcoin act as a risky asset amid global turmoil. The markets will calm down once the elections are over. Traditional markets have already hit the panic button amid the lingering economic uncertainty on top of the upcoming second wave of COVID-19 and the Presidential elections in the US. Investors are bracing for the worst and prefer to sell everything for cash, distorting common correlations, and market reactions to the risk-on/risk-off environment. 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