As the U.S. election approaches on November 5, Bitcoin traders are preparing for heightened volatility, with estimates suggesting price swings could reach as high as 20%. Insights from DeFi derivatives platform Derive indicate a shift in market dynamics tied to this significant financial event.
Nick Forster, founder of Derive, noted, “The latest trading analysis reveals compelling insights into market dynamics as we approach significant financial events.” Data indicates a high concentration of bets around an $80,000 strike price for Bitcoin options, coupled with a strong presence of short-term call sales. Traders are utilizing option premiums to brace for potential price movements.
On Monday, Bitcoin briefly surged past $70,000, reaching a level not seen since early June, with a current trading price of approximately $71,200. Forster explained, “The overwhelming dominance of calls being sold suggests a strategic premium collection by traders, while the focus around the $80,000 strike highlights a potential pivotal point for Bitcoin.”
In the past 24 hours, over 47% of options sold were calls, indicating traders are looking to capitalize on elevated premiums linked to election-related volatility. Volatility patterns across different expiration dates reveal that traders are preparing for a bumpy ride but are uncertain about the direction prices might take.
The upcoming presidential election is expected to be closely contested between Vice President Kamala Harris and former President Donald Trump, with Trump having made promises for more precise crypto policies.
Forster emphasized that short-term volatility is now outpacing long-term volatility, with a noticeable spike anticipated around election week. This trend suggests traders are betting on immediate impacts on Bitcoin's price as the election unfolds.
“There’s a one in three chance that BTC could see a swing greater than 10% on election day, with a more volatile scenario of 20% movement sitting at a 5% likelihood,” Forster stated. These statistics underscore the potential for significant price action tied to the election results.
Additionally, Forster noted that traders are paying more for options as a protective measure, indicating a trend toward hedging ahead of the election. This increase in cost, referred to as the volatility risk premium, illustrates that traders anticipate larger price shifts and are willing to invest in managing their risk.
As the U.S. election draws near, Bitcoin traders are positioning themselves for possible volatility. With significant price movements expected, particularly around election day, market participants are closely monitoring the unfolding political landscape. The interplay of election outcomes and Bitcoin's price action may present both challenges and opportunities for traders in the coming weeks.
October 2024, Cryptoniteuae