Monday's QCP Capital report highlighted two significant events likely to drive market volatility this week: the presidential candidate debate between Donald Trump and Kamala Harris, and the last U.S. Consumer Price Index (CPI) reading before the Federal Reserve's rate decision on Sept. 18.
"Crypto has stabilized after last week's move but implied vols are still elevated, and it seems the market is still anticipating volatility heading into this week's events," QCP Capital analysts said.
Cryptocurrency market participants will be keenly observing the performance of both candidates during this week's debate, as the outcome of November’s U.S. presidential election could have significant ramifications for the industry, according to a Bernstein note on Monday.
If the Republican candidate Donald Trump wins, Bernstein analysts expect bitcoin to reclaim new highs and reach close to the $80,000 to $90,000 range by the end of the fourth quarter. In the event of a victory for Vice President Kamala Harris, however, they predict bitcoin to break the current $50,000 floor and head back to test the $30,000 to $40,000 range.
Derivatives market traders positioning for a further drawdown
Regarding derivatives market positioning, QCP Capital observed that traders remain cautious about further declines after major cryptocurrencies like bitcoin and ether have fallen around 5% and 8%, respectively, over the past week.
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"Risk Reversals in the options market until October are still skewed towards puts in both bitcoin and ether," they added.
Despite this caution, QCP Capital maintains a "structurally bullish sentiment" in the longer term. The firm noted that derivatives traders are seizing the existing market conditions to place longer-term bullish bets, including significant purchases of March 2025 bitcoin call options with strike prices of $85,000, $100,000, and $BTC The analysts also found bitcoin's recent bounce from $52,500 to around $55,500 in the past 24 hours encouraging.
"Some institutions seem to think we have reached a bottom and are taking this opportunity to add to their bullish bets in December and March," they added.
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