Bitcoin Options Market Turns Cautious: Higher Demand for Puts Than Calls Before Election

Bitcoin Options Market Skew Signals Increased Put Demand Ahead of U.S. Election

With predictions of a surge in volatility brought on by the U.S. election, bitcoin traders are looking for security against price weakness. According to data sources, CF Benchmarks and QuickStrike put options, which provide protection against price declines and expire within a week, were more expensive than calls on Monday in the CME’s bitcoin options market.

For futures expiring Friday (P2XE24), the so-called 25-delta risk reversal was -1.3% on Monday, indicating a put bias. An easily readable picture of the sentiment of the market is provided by the statistic, which calculates the difference in implied volatility between out-of-the-money higher strike calls and lower strike OTM puts.

It looks like bitcoin options traders appear to be hedging their bets to the downside ahead of the U.S. election this week. Through a .25 delta risk reversal we can see that contracts expiring within a week are slightly negative – meaning puts more expensive than calls – compared to longer-dated maturities of either 2 weeks or 30 days, where the skew reverts to being positive again,

researchers at CF Benchmarks

Will U.S. Election Impact Bitcoin? Analysts Anticipate Major Price Fluctuations

In a single week, the price of Bitcoin dropped to $68,000 from almost all-time highs of $73,500, and Donald Trump’s prospects of winning the election also decreased. In line with the consensus analysts’ estimates for a year-end surge to $80,000 and above, the pricing of longer-duration options was positively biased in favor of calls, suggesting a more generally favorable outlook.

According to recent polls, Democrat Kamala Harris and her competitor Republican contender, Donald Trump, who is seen as being pro-crypto, are tied in the majority of swing states, including Pennsylvania, as well as nationally. According to some analysts, the final result, which is anticipated on Friday, could cause a $6,000–$8,000 swing in the price of Bitcoin due to the 50/50 odds.

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