Bitcoin Price Volatility Could Surge After U.S. Election, Say Derivatives Expert
Derivatives experts predict that the next U.S. presidential election may cause price swings that mirror the sharp fluctuations of early August; thus, cryptocurrency speculators hoping for a spike in bitcoin price volatility may soon get their wish.
I expect a +1.5-Sigma ($6,000 to $8,000 price range) as a result of the post-election price reaction,
Greg Magadini, director of derivatives at Amberdata
The forecast is predicated on an annualized forward volatility of 112%, which was obtained from the options trading on Deribit on November 6 and indicates a $4,000 price swing in either direction. A price swing between $6,000 and $8,000 corresponds to a positive 1.5-sigma of that.
Will the U.S. Election Trigger Bitcoin Volatility? Experts Predict 1.5-Sigma Move
When the so-called risk-on yen carry traders’ unwinding caused widespread risk aversion, Bitcoin last experienced a comparable price fluctuation in early August, plunging to $50,000. According to recent sources, Republican candidate Donald Trump, who is seen as being crypto-friendly, and his opponent, Democrat Kamala Harris, are locked in a close battle in seven swing states. For this reason, Magadini estimates 1.5-sigma volatility.
Regardless of the winner, the 50-50 chances suggest that the markets are unlikely to be surprised by the final result, suggesting that a positive 3-sigma move—three standard deviations from the mean in a normal distribution—looks unlikely. An extraordinary incident is indicated by a positive 3-sigma move. Similar to this, a sub-negative 1-sigma move or little price activity appears suspicious because traders won’t be able to price the election result ahead of time due to 50-50 probabilities. Results are anticipated on Friday, and the election is due on Tuesday.
DEX Traders Expect Ethereum’s Volatility to Surpass Bitcoin’s Amid Election Uncertainty
More volatile than Bitcoin, Ether is the native token of Ethereum‘s blockchain and the second-largest cryptocurrency by market value. The election in the United States is unlikely to change that. Ethereum has a 68% chance of chalking out a 9.35% to 10.19% price fluctuation, while Bitcoin is predicted to see volatility between 8.97% and 9.85%, according to on-chain options posted on the decentralized exchange Derive.
A 10% volatility in Bitcoin suggests a $6,800 swing, while a 10% volatility in Ethereum indicates a $247 change at the prevailing market pricing of $2,470. The DEX traders are also expecting bullish volatility. A bullish predisposition was indicated by the fact that, as of Sunday, there were 1,179 open-call option contracts compared to 885 open-put option contracts.
As the election nears, these figures are crucial for traders looking to navigate the heightened uncertainty in the crypto markets. It’s a pivotal moment for onchain options trading, demonstrating the sophisticated strategies traders are employing to hedge against or capitalize on expected volatility,
Nick Forster, founder of Derive
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