As the U.S. presidential election enters its final days, Bitcoin (BTC) traders are gearing up for potential price swings between $6,000 and $8,000, driven by heightened volatility and shifting market sentiment. Analysts, including Greg Magadini from Amberdata, point to recent options market activity as an indicator of significant movement on the horizon, with many traders adopting a bullish outlook despite the inherent uncertainty surrounding the election outcome.
Major Price Fluctuations Expected for Bitcoin
Magadini estimates a potential 1.5-sigma price shift for BTC around the election, translating to swings of $6,000 to $8,000. This is based on elevated annualized forward volatility of 112%, recently seen in options trading on Deribit. The options market has seen notable interest in call options at high strike prices like $70,000, $85,000, and $90,000, indicating strong expectations for a bullish price increase. While the direction of the price shift is still unknown, these elevated call options suggest that traders are positioning themselves for a potential rally.
Election Dynamics Drive Volatility in Crypto Markets
The close race between Republican candidate Donald Trump, who is considered crypto-friendly by many, and Democratic candidate Kamala Harris is adding to the volatility. With both candidates polling nearly evenly, the markets are preparing for an outcome that could push BTC either way, with a larger probability of moderate price fluctuations than an extreme, three-standard-deviation event. This close race means that traders may find it challenging to fully price in the election’s outcome in advance, adding to market unpredictability.
Fed Rate Decision Adds to Anticipated Volatility
The election is not the only key event impacting BTC’s price expectations. The Federal Reserve’s upcoming rate decision this week has the potential to influence market sentiment significantly, as investors weigh the central bank’s approach to inflation and interest rates. Together with the election results, this could set up BTC for a volatile week as the crypto market anticipates these two major drivers.
Ether Expected to See Major Swings Alongside BTC
In addition to BTC, Ether (ETH) traders on decentralized exchanges (DEXs) are preparing for substantial price movements. Increased stablecoin liquidity on these exchanges, especially for ETH pairs, indicates strong anticipation for possible entry points, with traders ready to react to election outcomes and the Fed’s decision.
Bullish Signals from BTC Options Market
Recent activity in the options market shows a notable tilt toward call options, signaling bullish sentiment. Traders appear more interested in higher strike prices, with BTC calls at $70,000, $85,000, and $90,000 trading at higher premiums than puts. This pattern underscores the market’s optimism despite uncertainties around the election. According to Joshua Lim, co-founder of crypto trading firm Arbelos Markets, this bullish positioning reflects expectations of BTC price gains following the election, even with spot prices slightly dipping over the weekend.
Conclusion
With the U.S. election days away and the Federal Reserve’s decision imminent, Bitcoin is entering a highly volatile period. Traders are bracing for possible $6,000 to $8,000 price swings, reflecting the combined impact of the election and broader economic factors. As crypto markets await these developments, BTC could either hit new highs or experience notable drops, depending on the market’s interpretation of the election outcome and economic policies. For investors, the next few days may mark a defining moment for BTC’s 2024 trajectory, setting the stage for either sustained growth or intensified volatility.