Massive Bitcoin Volatility Looming As US Presidential Election Approaches – Bitfinex

The coming weeks will see Bitcoin (BTC) experience massive volatility due to the uncertainty surrounding the US presidential election, the “Trump trade” narrative, and the performance of the fourth quarter seasonality that the asset has witnessed in recent years.

Analysts at crypto exchange Bitfinex said in a weekly report that these factors would create a “perfect storm” for BTC; however, they also promise exciting times ahead for the leading cryptocurrency, regardless of the narratives circulating in the industry.

The “Trump trade” narrative.

The US presidential election has an increasing influence on short-term bitcoin price movements. The crypto community sees a Republican victory as a bullish move for BTC, while a victory for the Democratic Party means the opposite. That’s because Republican candidate Donald Trump is a supporter of crypto and promised favorable policies for the burgeoning industry when he became president.

On the other hand, Democratic candidate Kamala Harris, who serves as the vice president of the current administration, which is leaning towards anti-crypto actions, only recently started to warm to digital assets as the heat intensified of the elections

The general market consensus is that options premiums and volatility in the US stock market and BTC should increase in the first week of November after the release of the election results.

However, with the growing correlation between Trump’s election odds and bitcoin’s upward trajectory, BTC is likely to experience greater volatility than other risk assets. This is the origin of Trump’s trade narrative, which reflects the market’s belief that the trajectory of bitcoin depends on the outcome of the election.

“Regardless of the outcome of the election, short-term volatility is expected to be higher than usual, although we are confident of long-term price appreciation,” Bitfinex said.

Bitcoin Options See the increase in activity

Bitcoin has already started experiencing intense volatility. Last week, the asset experienced a quick 6.2% drop before recovering. On Monday, the cryptocurrency breached $70,000 and had touched $71,200 at the time of writing, according to data from CoinMarketCap.

Notably, Bitcoin is seeing an increase in options activity. Implied volatility is expected to peak on November 8 at 100 vol for strike prices above $100,000 for BTC, and options expiring on key dates around the election are driving higher premiums and fueling increased activity.

Meanwhile, BTC has shown remarkable resilience since falling below $54,000 in early September. The asset is on track to close October in the green, just like in previous years.

SPECIAL OFFER (Sponsored) Binance Free $600 (Exclusive to CryptoPotato): Use this link to register a new account and receive an exclusive welcome offer of $600 to Binance (full details).

2024 LIMITED OFFER on BYDFi Exchange – Up to $2888 Welcome Reward, Use this link to register and open a 100 USDT-M position for free!