With less than three weeks to go before the US presidential election, uncertainty in the BTC market has intensified, with premiums on related options trades already reaching 10 per cent. A large number of long-term call option trades involving 600 contracts with a strike price of $120,000 emerged during the US trading session. Meanwhile, the BTC spot ETF added $456.9 million yesterday, achieving four consecutive days of inflows. Traders are preparing for what happens after 5 November and how the new government will respond to factors affecting financial markets, including cryptocurrencies.
Cryptocurrencies have been on an uptrend over the past week, with China’s stimulus measures, interest rate cuts by Western central banks, and perhaps the U.S. election becoming a clearer focal point in the reasons for the recent rise.
While cryptocurrencies have only really become popular assets during one of the past (2020) presidential elections, the second half of October usually marks the beginning of a bullish period for financial assets such as equities, so cryptocurrencies’ recent moves may not be unusual.
In fact, the performance of Bitcoin (BTC), based on Coinglass data from 2013 to 2023, shows that returns in the second half of October (16-31) are twice as high as those in the first half (1-15).
(Source: Coinglass)
Election Impact
Data from ETC Group, a division of Bitwise Asset Management, shows that there is uncertainty in token prices due to the outcome of the election.
Using implied performance versus theoretical values, ETC Group found that Bitcoin could rise 10% in either direction depending on the outcome of the election. Given that the spot price is currently slightly below $68,000, a 10 per cent rise would mean a new high, surpassing March’s $73,750.07. The team also found that the impact of the election will likely have the biggest impact on Caldano (ADA) and Dogcoin (DOGE), which are up 18% and 20%, respectively.
（Source: ETC Group）
Additionally, Ycharts data shows that in presidential election years since 1950, the stock market tends to bottom out in September and/or October before bouncing back in November. So far, that’s what we’ve seen in the S&P 500 and Nasdaq, which are both up since the beginning of last month.
（Source: YCharts）
Aside from the U.S. election, the options market is showing a bullish bias towards bitcoin, with the majority of call open positions sitting at $70,000 and $80,000 strike prices. expiring on 29 November, the strike prices are $141 million and $120 million in notional value, respectively.
The bullish bias was even more pronounced for the December 27 expiry, with the majority of call open positions settling at $100,000 strike prices with a notional value of more than $620 million, according to Deribit.
Geoffrey Kendrick, head of global digital asset research at British multinational bank Standard Chartered, wrote in a report on Tuesday, ‘With the U.S. election approaching, Trump is the most likely candidate to be elected, and even from a digital asset perspective perspective, Harris looks good as well, and it does seem increasingly likely that the broader digital asset ecosystem will go mainstream.’
‘For BTC, this means that Bitcoin is likely to rise to an all-time high of $74K before the election.’
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