Bitcoin (BTC) gained value on Tuesday as the cryptocurrency market continued to recover from last week’s sharp sell-off.

The BTC price is up 1.7% in the past 24 hours, approaching $58,000 at the end of the US trading session and is nearly 10% higher than last Friday’s low.

While digital assets are unlikely to be mentioned in the US presidential debate between Donald Trump and Kamala Harris, the two parties’ contrasting policies towards cryptocurrencies could influence market sentiment and have potential impacts on prices as the election approaches.

Aurelie Barthere, chief research analyst at Nansen, said the ongoing uncertainty surrounding the election could weigh on crypto prices into November. However, she noted that the debate could “bring a small respite” if Harris’ lead in the polls shrinks, which could also affect market volatility.

Meanwhile, analysts at K33 Research suggested that Bitcoin and the broader market could be poised for a significant rally. The 30-day average funding rate for perpetual swaps, a key metric, has turned negative, a situation that has only occurred six times since 2018. “Historically, monthly funding rates hitting negative levels have coincided with a market bottom,” K33 analysts Vetle Lunde and David Zimmerman wrote in a report on Tuesday.

According to the report, historically, when funding rates have turned negative, Bitcoin has returned an average of 79% over the following 90 days, with the median 90-day return being 55%. In addition, open interest in crypto derivatives has steadily risen to its highest point since late July, amid an influx of short positions. This dynamic, combined with negative funding rates, suggests that the market is increasingly vulnerable to a short squeeze, which could push prices higher.

K33’s analysts concluded that the current environment presents “a compelling case for aggressive exposure to BTC” in the coming months.

*This is not investment advice.