PANews reported on November 5 that Singapore-based crypto investment firm QCP Capital stated that in the stock, bond, and cryptocurrency markets, as the most closely contested presidential election in U.S. history approaches, market anxiety is becoming increasingly evident. The 'Trump trade' (betting on a stronger dollar, rising cryptocurrencies, and increasing Treasury yields) is heating up ahead of the elections, thanks to Trump's lead in prediction markets. However, if Harris ultimately wins, these gains could be quickly erased, leading to significant market volatility overnight. The cryptocurrency market currently anticipates that on election night, the volatility of the spot price of Bitcoin will reach around 3.5%. But traders may underestimate the post-election risks: the lack of volatility premium after November 8 indicates that the market expects quick results from the election but may underestimate the potential impacts of delays or contentious outcomes.
The results of the congressional elections are equally crucial and may have an impact on par with that of the presidential elections. A significant victory for the Republican Party could mean higher future fiscal deficits, prompting the Federal Reserve to take a more hawkish stance—this would undoubtedly be unfavorable for risk assets. Conversely, if the legislature is divided, the market may become more stable, and volatility may gradually decrease.
Currently, the options market shows a balanced state between call options and put options. In the past few days, there has been a significant amount of buying activity in both call options above and put options below. However, Bitcoin is still seen as part of the 'Trump trade'. On Monday, as there was a large outflow of funds from the spot ETF, the spot price of Bitcoin dropped, which aligns with a poll showing Harris holding a slight lead in Iowa. With the results of the election being announced tomorrow, significant volatility in the spot price of Bitcoin is expected.
