Bitcoin traders brace for fierce price swings as clock ticks to US vote

US bitcoin ETFs see second highest monthly inflow.

Bitcoin speculators are bracing for potentially pronounced market volatility in the aftermath of Election Day in the US on Tuesday.

A 30-day gauge of implied swings in the largest digital asset has hit the highest level since a global market rout roiled investors in August. The index, compiled by CF Benchmarks, is derived from CME Group Bitcoin options pricing.

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The options market also signals expected moves of about 8% in either direction the day after the vote, compared to typically 2% up or down on a normal day, said Caroline Mauron, co-founder of Orbit Markets, a provider of liquidity for trading in crypto derivatives.

“No significant volatility premium is priced in after 7 November, suggesting the market expects a fairly quick resolution,” Mauron added. “This might prove optimistic, considering how close a race the polls are showing.”

The contest between Republican nominee Donald Trump and Democratic rival Vice President Kamala Harris is going down to the wire, leaving investors across asset classes preparing for market upheavals. During campaigning, Trump took an avowedly pro-crypto stance, while Harris, in a measured approach, pledged to back a regulatory framework for digital assets.

Trump trade

Both stances stirred optimism in the crypto community given the contrast with an industry crackdown under President Joe Biden. But Trump’s tight embrace of the sector turned Bitcoin into one of a number of so-called Trump trades.

The former president’s lead over Harris in betting markets helped to lift Bitcoin to the verge of a record high a week ago but his odds have since dropped, pushing the token lower. Polling indicates a photo finish, though there are also some encouraging signs for Harris in last-ditch surveys of voter intentions.

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An even distribution of bearish and bullish options for Bitcoin throughout October indicates speculators are equally poised for upward and downward movements leading up to the US vote, according to a report from Derive.xyz, a trading venue focused on crypto derivatives.

For the weeks after the election, data from the Deribit exchange hint at a possible $60 000 to $80 000 trading range based on peak open interest — or outstanding contracts — for bearish and bullish wagers, respectively.

Bitcoin churned near $69 000 as of 9 a.m. Monday in London. The digital asset reached an all-time high of $73,798 in March, aided by inflows into dedicated US exchange-traded funds. The original cryptocurrency has rallied more than 60% so far in 2024, outperforming assets like stocks and gold.

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