Bitcoin is forecasted to face lively weeks ahead as uncertainty looms before the election, the 'Trump trade' trend, along with favorable Q4 conditions creating a 'perfect storm' for the market, according to the latest report from 'Bitfinex Alpha.'
The report indicates that during the preparations for the U.S. election, Bitcoin showed significant price volatility after adjusting 6% in the week before surpassing the $70,000 threshold today.
As election day approaches, analysts at Bitfinex predict that volatility will increase, particularly with the view that a Republican victory could boost the market, while a Democratic win brings many unpredictable consequences.
The options market is also affected
The price of options and the expected daily volatility of the U.S. stock market and Bitcoin are likely to rise as election results are expected to be announced from November 6 to November 8.
The report suggests that Bitcoin could experience even more volatility as investors consider the market changes based on election results, especially in the case of former President Donald Trump's re-election thanks to his pro-crypto stance.
Additionally, the implied volatility curve (IV) indicates high expectations, with BTC prices on November 8 recording an IV exceeding 100 for options with strike prices above $100,000.
This high IV may raise option prices as sellers demand larger premiums to offset risks from significant volatility. The report notes that this cost reflects cautious sentiment as the market prepares for major fluctuations ahead.
Supporting this optimism is the stable accumulation of call options for the expiration date of December 27, particularly focused on a strike price of $80,000. As open interest in options rises to new highs, the market shows signs of positioning for a post-election rally, potentially pushing Bitcoin to – and beyond – the all-time high of $73,666.
Open interest on Deribit | Source: Bitfinex
Positive signs from Q4
Despite recent corrections, Bitcoin still shows strong prospects in Q4, typically a growth quarter, especially in halving years. BTC has now risen over 30% from the September low, recording a record increase of 7.29% last month – a stark contrast to the usual challenges faced in September.
Despite concerns ahead of the election potentially dampening the momentum of October, the average growth rate of 31.34% in historical Q4 is an optimistic sign for the bullish trend. Bitcoin has never recorded a bearish Q4 in any year with a halving event.
Moreover, the 'Trump trade' effect also plays a significant role in Bitcoin's current performance, with macroeconomic factors and high betting odds for Trump's potential re-election continuing to drive market volatility.
The report cites data from RealClearPolitics and Polymarket, showing the probability of Trump's victory currently at around 62% and 66%, further increasing the volatility of the already sensitive market during this period.
Source: https://tapchibitcoin.io/trump-trade-and-the-q4-bull-market-will-create-a-perfect-storm-for-bitcoin.html