According to a new report by Bybit and Block Scholes, market trends in the period immediately after the U.S. elections suggest traders are leaning strongly toward leveraged long positions, especially in perpetuals and futures contracts. The preference, the report adds, shows traders believe that short-term market volatility has subsided, indicating a more stable environment.
The period has also been characterized by renewed interest in “directional bets” and robust trading volumes. The change in these metrics indicates users’ willingness to capitalize on positive post-election movement and sustained market activity respectively.
As market data in the hours before confirmation of Donald Trump’s victory shows, the USD value of bitcoin (BTC) surged, indicating the crypto community’s excitement at the prospect of having two pro-crypto individuals in the United States’ highest office. As reported by Bitcoin.com News, the top crypto asset briefly surged past $77,000 and some market observers now assert that this rally is likely to continue into the foreseeable future.
Commenting on how the market has reacted to Trump’s ascent to the Oval Office, the Bybit and Block Scholes report said leveraged positions, which had unwound during pre-election spot volatility, have since rebounded. This led to a rise in open interest across both perpetuals and futures. The report added:
Despite the passing of the event risk, positioning across all markets remains close to all-time highs, indicating that traders are willing to continue to pay for leveraged long exposure as BTC trades at all-time highs.
The report suggests that BTC continues to dominate futures and derivatives markets, indicating that a significant rotation of capital into ether (ETH) contracts has yet to occur.
Meanwhile, the report asserts that Trump’s victory, which has not been disputed, led to a flattening of BTC’s volatility term structure. Trump’s victory, which was preferred by the market, caused the crypto asset’s short-term volatility to decrease to match longer-term levels. The report also highlighted the surge in BTC options open interest, which came against the background of lower trading volumes, as an indication of investors’ increased interest in potential post-election volatility.
While ETH has also seen its volatility term structure flatten, the report said its short-term volatility is lower than long-term volatility, leading to a steeper term structure. This suggests lower expected short-term volatility for ETH. While trading volumes remain low, open interest has increased, indicating potential future volatility despite the current market calm, the report concluded.
