Bitcoin traders are gearing up for a volatile week as the U.S. presidential election draws near. On the CME, data shows a surge in demand for put options, signaling that investors are protecting themselves against potential price drops.
Quick Take
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Traders on the CME are hedging against potential Bitcoin price drops due to U.S. election volatility.
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A Trump victory could boost crypto markets, while a Harris win may dampen industry enthusiasm, according to reports on Cointelegraph.
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Bitcoin dominance surges to a new high of almost 60% before the US election outcome, overshadowing altcoins as traders prioritize BTC exposure.
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Bitcoin's implied volatility remains low, but experts anticipate post-election price swings.
CME Data Reveals Downside Protection: Put Options Pricier Than Calls
Bitcoin risk reversal | Source: CoinDesk
Put options on the CME have become pricier relative to calls, especially those expiring within a week. This trend reflects traders’ caution, as many prepare for sharp price movements once election results come in. The 25-delta risk reversal—a key metric comparing the implied volatility of puts and calls—has turned negative. This shift reveals a market preference for downside protection.
CF Benchmarks analysts noted, “Bitcoin options traders are clearly hedging against potential price swings due to the U.S. election.”
Deribit Options Market Aligns with Broader Sentiment
On Deribit, the sentiment is mixed but leans bullish for the month ahead. Data from Amberdata shows a largely neutral bias for short-term options, but with an increasingly positive outlook for later expiries. The absence of a strong bearish tilt suggests that traders are largely “waiting and watching.”
In case you missed it, KuCoin has recently launched options trading on the mobile app for BTC and ETH. Learn more about how options trading on KuCoin works.
In addition, ETFs tied to Bitcoin and Ethereum remain popular trading assets, viewed by some as “call options” on the election's outcome. A favorable regulatory environment could propel these funds forward, signaling confidence in digital assets.
Can US Election Outcome Drive Bitcoin Price Action?
The market’s response hinges largely on the election’s outcome. Polls indicate a close race, with crypto-friendly candidate Donald Trump trailing narrowly. Analysts suggest that a Trump victory could ignite a crypto rally, while a Harris win might result in stricter regulations, slowing the sector’s momentum.
Matthew Sigel, Head of Digital Assets Research at VanEck, noted, “A year-end rally to $80,000 remains within sight if broader economic conditions align,” pointing to the November 29 options showing a call bias as a sign of longer-term market optimism.
Bitcoin Dominance Climbs as Altcoins Falter
Bitcoin dominance crosses 57% | Source: CoinStats
Bitcoin’s dominance has soared to a new cycle high, capturing over 57% of the crypto market. As traders focus on BTC, altcoins struggle to keep up, with several down by 10% or more from recent highs. Funding rates have stabilized, signaling limited speculative interest in altcoins.
Analysts from Bitfinex warn that without a new catalyst, altcoins may continue to lag. They commented, “The speculative interest that once fueled altcoins has shifted to Bitcoin.”
Election Week: “Calm Before the Storm” for Bitcoin
With election day here, Bitcoin’s implied volatility remains unexpectedly low. Analysts at Bitfinex see this as a temporary lull, possibly preceding a sharp increase in volatility once results are finalized. This “calm before the storm” period may give way to significant price swings, especially if the election outcome surprises the market.
As the race concludes, traders should prepare for a high-stakes week where unexpected moves in Bitcoin’s price may create opportunities—or risks—for those unprepared.
Read more: Bitcoin Price Prediction Ahead of the 2024 US Election: Bullish or Bearish?
