Bitcoin Set for $6K-$8K Seesaw as U.S. Election Approaches
Nov 4, 2024
2 min read
As the U.S. presidential election draws near, Bitcoin (BTC) is poised for significant price volatility, with analysts predicting swings between $6,000 and $8,000. This forecast comes amid a tightly contested race between Republican candidate Donald Trump and Democrat Kamala Harris, which is expected to influence market dynamics significantly.
Key Takeaways
Analysts predict Bitcoin could swing between $6,000 and $8,000 post-election.
Historical trends suggest Bitcoin rallies after U.S. elections, regardless of the winner.
Ether (ETH) is expected to experience even greater volatility than Bitcoin.
Market Volatility Predictions
Greg Magadini, director of derivatives at Amberdata, estimates that the upcoming election could lead to a price reaction in Bitcoin similar to the dramatic movements seen in early August. He anticipates a +1.5-Sigma price range, indicating a potential fluctuation of $4,000 in either direction based on current market conditions.
The volatility is derived from the annualized forward volatility of 112% observed in options trading on Deribit, suggesting that traders are preparing for significant price movements.
Historical Context
Historically, Bitcoin has shown a pattern of rallying after U.S. elections. In previous election cycles:
2012 Election: Bitcoin was around $11 and peaked at over $1,100 by November 2013.
2016 Election: Starting at approximately $700, Bitcoin reached around $18,000 by December 2017.
2020 Election: Bitcoin surged 478% to a peak of about $69,000 a year later.
If this trend continues, Bitcoin could potentially exceed $100,000 in the year following the election, as it remains undervalued compared to previous cycles.
Current Market Sentiment
Market participants are positioning themselves for bullish volatility, with options traders purchasing calls at strike prices of $70,000, $85,000, and $90,000. This indicates a strong sentiment that Bitcoin could reach new record highs following the election results.
Joshua Lim, co-founder of Arbelos Markets, notes that call options are trading at a premium compared to puts, reflecting a bullish outlook among traders despite recent polling suggesting a tighter race for Trump.
Ether's Expected Volatility
Ether (ETH), the second-largest cryptocurrency by market capitalization, is anticipated to experience even greater volatility than Bitcoin. Onchain options data indicates a 68% chance of ETH experiencing a price swing of 9.35% to 10.19%, compared to Bitcoin's expected volatility of 8.97% to 9.85%.
As the election approaches, the total open interest in call options for ETH is significantly higher than that for puts, further indicating bullish sentiment in the market.
Conclusion
With the U.S. presidential election just around the corner, Bitcoin is set for a rollercoaster ride in the coming days. Traders and investors are closely monitoring the situation, anticipating significant price movements that could reshape the cryptocurrency landscape. As history suggests, regardless of the election outcome, Bitcoin may be on the verge of a substantial rally, making this a pivotal moment for the crypto market.
Sources
Trump-Harris Showdown Might Lead to a $6K-$8K Rollercoaster in Bitcoin (BTC) Price: Analyst, CoinDesk.
U.S. Election Winner Is Unlikely to Have Much Influence on Bitcoin's Post-Result Rally, History Indicates: Van Straten, CoinDesk.
O confronto Trump-Harris pode levar a uma montanha-russa de US$ 6 mil a US$ 8 mil no preço do Bitcoin (BTC): analista, CoinDesk.
Trump-Harris Showdown Maaaring humantong sa $6K-$8K Rollercoaster sa Bitcoin (BTC) Presyo: Analyst, CoinDesk.
Bitcoin (BTC) se encamina hacia una volatilidad de entre USD 6000 y USD 8000 antes de las elecciones en EE. UU., según analista, CoinDesk.