Bitcoin Volatility Expected as U.S. Election Approaches: Bitfinex
Bitcoin is expected to see significant volatility as the U.S. presidential election approaches, driven by political narratives and market dynamics.
According to analysts at Bitfinex, Bitcoin (BTC) is set to experience significant volatility in the coming weeks due to the uncertainty surrounding the U.S. presidential election, the prevailing "Trump trade" narrative, and the seasonal performance trends observed in previous Q4 periods. These elements are expected to create a "perfect storm" for Bitcoin, promising exciting times ahead for the leading cryptocurrency.
The Impact of the Presidential Election
The U.S. presidential election is increasingly influencing Bitcoin's price dynamics. The crypto community generally views a Republican victory as bullish for BTC, while a win for the Democratic Party could have the opposite effect. Republican candidate Donald Trump is known for his pro-crypto stance, which includes promises of favorable policies for the industry. Conversely, Democratic candidate Kamala Harris has been associated with anti-crypto sentiments, although she has recently shown some support for digital assets.
Market consensus suggests that option premiums and volatility for both the U.S. stock market and Bitcoin are likely to rise following the election results. The correlation between Trump's election odds and Bitcoin's price trajectory indicates that Bitcoin may experience greater volatility compared to other risk assets.
“Regardless of the election outcome, short-term volatility is expected to be higher than usual, though we remain confident in longer-term price appreciation,” stated Bitfinex.
Surge in Bitcoin Options Activity
Bitcoin has already begun to show signs of volatility, with a recent 6.2% drop followed by a recovery. As of the latest data, Bitcoin surged past $70,000, reaching $71,200. Notably, there has been a surge in Bitcoin options activity, with implied volatility expected to peak around November 8, particularly for strike prices over $100,000. The upcoming election dates are driving higher premiums and increasing activity in the options market.
Since falling below $54,000 in early September, Bitcoin has demonstrated remarkable resilience and is on track to close October positively, consistent with trends from previous years.
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