Barely paying attention to the U.S. elections! Bitcoin options traders have set their sights on the $80,000 mark.
Options traders are increasingly betting that regardless of the outcome of the U.S. presidential election, Bitcoin will reach an all-time high of $80,000 by the end of November.
The implied volatility of Bitcoin options expiring around the election day on November 5 is very high, with a bias towards call options, which give buyers the right to purchase the cryptocurrency at a higher price.
David Lawant, head of research at cryptocurrency market maker FalconX, stated, "I believe the market consensus is that Bitcoin could perform well regardless of the election outcome, and our analysis shows that option activity around the upcoming election exhibits a clear bullish bias."
Republican candidate and former President Trump openly supports cryptocurrencies to the extent that Bitcoin is seen as a so-called 'Trump trade'. His Democratic opponent, current Vice President Harris, has promised to support a regulatory framework for the industry, contrasting with the Biden administration's crackdown on the sector. Non-political factors such as further interest rate cuts by the Federal Reserve are seen as contributing to the optimistic sentiment.
Bitcoin reached an all-time high of $73,798 in March this year, driven by the U.S. launching a spot Bitcoin ETF and boosting market demand for the cryptocurrency, but the Bitcoin bull market has since cooled off.
Earlier this week, the largest cryptocurrency briefly approached $70,000 before retreating. The token has risen about 61% this year.
According to data compiled from the largest crypto options exchange Deribit, the ratio of Bitcoin put options to call options is on a downward trend toward the end of the year, with more traders buying call options than put options.
Yev Feldman, co-founder of SwapGlobal, which provides derivatives such as swaps and options to U.S. digital asset investors, stated, "We see traders buying call options near $68,000 and put options near $66,000, in other words, many are continually adjusting their positions for Bitcoin to break further on both ends, however, there are limited reasons for a significant drop in Bitcoin after the U.S. presidential election, making bullish bets more meaningful."
Data shows that open contracts for call options expiring on November 29 are concentrated around $80,000, with the second most popular strike price at $70,000. Data also shows that open contracts for call options expiring on December 27 are concentrated around $100,000 and $80,000, while the most popular strike price for call options expiring on November 8 is $75,000.
Additionally, the premium for Bitcoin call options relative to put options is also relatively high. Jake Ostrovskis, an over-the-counter trader at Wintermute, wrote in a report on Monday that at higher levels, options traders are driving up the premiums for call options on contracts expiring beyond one day.
Lawant said, "This indicates that investors are more likely using the options market as a tool to capture potential upside rather than as a hedge against downside risk, and for other non-Bitcoin crypto assets, I believe opinions are more divided. There is less consensus in the market on how these alternative cryptocurrencies may perform under different election scenarios."
Lawant noted that unlike other major events such as the launch of the spot Bitcoin ETF and halving, Bitcoin's volatility before and after elections is generally lower, although volatility may change as election day approaches.
