Bitcoin Volatility- Bitcoin Dominance Grows as Altcoins Struggle During Election Period
Bitcoin volatility, which measures the expected fluctuations in its price, has stalled recently, with market participants holding their breath as they await the results of the United States presidential election. Analysts from Bitfinex believe this lull could be a precursor to more intense price movements, calling it the calm before the storm.
Current Bitcoin Volatility Levels and Market Sentiment
Bitcoin’s implied volatility, a key measure of how much traders expect its price to move, has dropped to the low 40s, signaling a lack of confidence in significant price movements. As of November 3, the Bitcoin volatility index reached a new three-month high of 65.7 but has since fallen to 63.2, according to data from Deribit, a crypto derivatives exchange. This suggests that traders are uncertain about which direction the market will take in the near term.
In addition, CoinGlass data reveals that Bitcoin’s open interest — the number of outstanding contracts — has sharply decreased. Traders appear to be closing large positions, both short and long, ahead of the election. Bitfinex analysts noted that despite an expectation for heightened volatility as the election approached, many market participants have adopted a wait-and-see attitude. Despite a general expectation for heightened volatility leading up to the day of the US elections on November 5, many market participants seem hesitant to take action, the Bitfinex report stated.
Expectations for Post-Election Volatility: Big Moves or Deeper Correction?
Despite the current lull, analysts expect a surge in volatility after the election results are in. According to Bitfinex, this could trigger big moves in Bitcoin’s price. However, if the expected volatility does not materialize, it could be a warning sign of a much deeper correction for Bitcoin on the lower timeframes.
The report aligns with expectations from other market observers who also anticipate major price swings. One trader predicted that Bitcoin’s price could swing by at least 10% in either direction once the election results are announced. This uncertainty surrounding the outcome has left traders on edge, and Bitcoin’s price will likely be volatile in the coming days.
Bitcoin Dominance and Altcoin Market Struggles
As Bitcoin’s dominance reached a new cycle high of over 60% on October 29, analysts observed a marked shift in market focus. The market is largely concentrated on Bitcoin as it heads into the election, with altcoins like Ether (ETH) and Solana (SOL) seeing significant losses. Altcoins are now seeing severe drawdowns whenever Bitcoin pulls back, the report noted. Ethereum, for example, has dropped roughly 12% from its recent highs, and is now down 40% from its initial rally following the announcement of the Bitcoin ETF.
Bitfinex analysts pointed out that the speculative interest that once supported altcoins seems to have evaporated. The speculative interest that once supported altcoins seems to have vanished, reflected in stable funding rates and muted overall market sentiment, they wrote. With Bitcoin absorbing most of the capital inflow into crypto assets, altcoins are struggling to keep up. Without a fresh catalyst to drive new interest, their chances of a recovery in the near term appear slim.
Bitcoin’s Resilience Amid Market Uncertainty
Despite the challenges facing altcoins, Bitcoin has shown remarkable resilience since hitting a low in September. The report highlights Bitcoin’s strength and suggests that its continued dominance could set the stage for an electrifying week ahead as the market reacts to the election results. Bitcoin’s stability during this period may indicate a strong potential for significant price movements once the election uncertainty is resolved.
In conclusion, while the crypto market appears relatively calm at the moment, the stage is set for heightened volatility. The outcome of the US election will likely be the catalyst that either sparks large-scale price moves in Bitcoin or, if the market fails to react as expected, sets the stage for a deeper correction. With Bitcoin’s dominance solidified, all eyes will remain on the leading cryptocurrency as traders prepare for what could be a tumultuous week ahead.
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