Traders are bracing for increased volatility in the bitcoin market on the night of the U.S. presidential election, with a potential 3.5% price swing on election night, according to analysts. "The crypto market is currently pricing in a plus or minus 3.5% in bitcoin spot movement on the election night itself," QCP Capital analysts said, adding that derivatives market data show traders are neglecting to position for potential downside risks after election night if the results are delayed or disputed.
In the options market, bullish sentiment appears strong, with many call options set to expire today featuring strike prices above $70,000. "With the U.S. election approaching, we are observing heightened market anticipation, we currently have approximately $3 billion in options open interest set to expire on November 8, with a notable focussed positioning of call options on bitcoin at strike prices of $70,000, $75,000, and $80,000, indicating relatively strong bullish sentiment," Deribit CEO Luuk Strijers told The Block.
SkyBridge Capital CEO Anthony Scaramucci has affirmed an optimistic forecast for bitcoin ahead of today's election, stating that it will "go higher irrespective of whoever is the president." Considering potential market reactions to either a Donald Trump or Kamala Harris victory, Scaramucci suggested that bitcoin might see a short-term boost if Trump wins, as he is widely viewed as a deregulator likely to reverse many Biden administration policies. "Harris has indicated that she's pro blockchain and pro bitcoin. So for those reasons, I think I'm indifferent as it relates to bitcoin specifically," he added in an email sent to The Block.
However, QCP analysts cautioned that the low volatility premium beyond today’s expiry suggests markets may be underestimating volatility risks later in the week and beyond. "This suggests that markets expect a quick resolution, possibly underestimating potential delays or contested outcomes," QCP Capital analysts added in a report on Monday.
FalconX Head of Research David Lawant also observed low implied volatility for options expiring on the week of the election. “Unlike previous key events in 2024, where implied volatility expanded by at least 25 IV points, implied volatility ahead of the election has remained flat or even decreased over the past few months,” Lawant told The Block.
Ahead of today’s U.S. presidential election, bitcoin dominance has surged past 60%—a new cycle high—as interest in altcoins wanes, according to Bitfinex analysts. The altcoin market has shown signs of stagnation, with leading assets like Ethereum and Solana experiencing steeper drawdowns than bitcoin over the past week. Ethereum has now fallen 7% in the past seven days, while Solana has dropped by around 10%.
"With bitcoin absorbing most of the capital flow into crypto assets, altcoins are struggling to keep up, and without a fresh catalyst, their prospects for a comeback in the near-term appear slim," Bitfinex analysts told The Block. Deribit CEO Luuk Strijers highlighted a similar trend, noting that bitcoin’s market share has reached levels not seen since 2021.
According to Sygnum Bank’s Q4 2024 Investment Report, bitcoin’s dominance is bolstered by its growing reputation as a safe-haven asset. The report cites factors such as bitcoin’s sustained appeal in a market where capital flows have increasingly favored bitcoin over altcoin projects. "Cryptocurrency application sectors are being disadvantaged by money flowing into memecoins instead of economically productive projects, which all support bitcoin’s continued dominance," the Sygnum Bank report added.
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