Election uncertainty, the “Trump trade” saga, and historically favorable Q4 conditions lead to turbulent conditions for Bitcoin (BTC) in the coming weeks, according to the latest Bitfinex Alpha It is said that this has created a “perfect storm” for market movements. report.
According to the report, Bitcoin has already seen a “whip-like” price move in the lead-up to the US election, following a 6% correction last week after Bitcoin neared $70,000. That's what it means.
Bitfinex analysts believe that given the widely held view that a Republican victory could have a more ambiguous impact, especially as Election Day approaches, while a Republican victory could push the market higher. We expect volatility to intensify.
The options market will also be affected.
With election results expected around November 6th and November 8th, US stock market and Bitcoin option premiums and expected daily volatility are expected to rise.
The report comes as traders consider potential changes in the market related to the election results, especially if former US President Donald Trump, who has been vocal about his support for cryptocurrencies, is re-elected. , added that Bitcoin's volatility could increase further.
Additionally, the implied volatility (IV) curve reflects rising expectations, with Bitcoin's November 8th strike price showing that the IV level for options with a strike price above $100,000 is above 100. It suggests that.
Typically, a high IV increases the option price because the seller demands a higher premium to offset the risk of rapid price changes. The report suggested that the higher costs reflected cautious sentiment in the market as it braced for significant price fluctuations in the coming weeks.
Options activity confirms this sentiment. Call options with a strike price of $80,000 and expiring in December have been in the spotlight over the past month, suggesting market participants are bracing for a potential price rally through the end of the year.
Q4 shows signs of strength
Despite the recent correction, Bitcoin is showing signs of potential strength in the fourth quarter, which has been a historically bullish quarter, especially during halvings. BTC is currently up over 30% from its September lows, with a record 7.29% gain last month, in contrast to the typical September challenge.
While pre-election uncertainty may dampen October's close, the historic 31.34% average fourth-quarter gain remains a hopeful indicator of bullish momentum. Bitcoin has never been bearish in the fourth quarter during the halving.
Additionally, the “Trump trade” effect is playing a significant role in Bitcoin’s current performance due to increased betting odds in favor of macroeconomic factors and uncertainty in the feeding market of Trump’s reelection.
The report cites recent data from RealClearPolitics and Polymarket, which puts Mr. Trump's odds of victory at about 59% and 64.9%, respectively, further fueling an already volatile market.
