Bitcoin and the Crypto Market Prepare for Increased Volatility as US Elections Approach
As the US elections approach, the crypto market is preparing for a significant surge in volatility, with traders anticipating price fluctuations of up to 10% for Bitcoin and Ethereum.
The implied volatility of Bitcoin and Ethereum has increased, surpassing 80%, due to uncertainties surrounding the election results, which could directly impact digital asset prices.
Despite this heightened volatility and a recent price drop, options data shows a bullish bias among Bitcoin investors, with more open call options than put options, while Ethereum may face even higher volatility, with price predictions ranging between $2,000 and $3,000.
Increased Volatility: Bitcoin and the Crypto Market Prepare to Move
As the upcoming US elections loom, the crypto market is primed for a notable increase in volatility, indicating significant swings in the days ahead. According to Nick Forster, founder of DeFi options protocol Derive.xyz, traders should anticipate price variations of nearly 10% for Bitcoin and Ethereum, with a two-thirds probability for post-election significant oscillations.
The advanced volatility of BTC and ETH has spiked overnight, reaching levels above 80% for both Bitcoin and Ethereum, which were both slightly above 70%. This surge seems to stem from uncertainties surrounding the election results, which could directly influence digital asset prices.
The Political Context Weighs on Market Sentiment
The recent performances of Democratic candidates in polls have had immediate repercussions on the markets, notably by slightly decreasing former president Donald Trump’s chances of victory on prediction platforms like Polymarket. This uncertainty has contributed to the decline in the price of Bitcoin, dropping from its recent peak of $73,500 on October 29th to a low of $67,500 yesterday morning, before stabilizing around $68,500 at the time of publication.
Open Options Show Bullish Bias Despite Risks
Despite this increased volatility, options data shows an optimistic sentiment among BTC investors. In fact, the total number of open call options for Bitcoin stands at 1,179 contracts, compared to 885 for put options, indicating a bullish bias despite the anticipated turbulence. This predisposition of traders suggests underlying confidence in the market’s upward potential, even if prices are likely to fluctuate significantly.
Ethereum Struggles: A Stronger Volatility to Come?
Ethereum, in the same vein as Bitcoin, has seen its price drop by 9.2% since October 30th, currently hovering around $2,450. Traders anticipate even higher volatility for Ether, with the possibility of ETH reaching as high as $2,700 or plummeting to $2,200. In an extreme scenario, Ethereum could drop below $2,000 or soar to $3,000.
