October 16 Bitcoin News – Options Data Indicates Positive Outlook for Bitcoin as Election Nears
October 16 Bitcoin News – As the U.S. Presidential Election nears, options data reflects a bullish bias for Bitcoin (BTC) and a continued demand for upside exposure. Recent analysis indicates that rising odds of a potential Trump victory have energized market participants, leading to a notable shift in sentiment.
Historical Correlation Breakdown?
Traditionally, Bitcoin has exhibited a negative correlation with the U.S. dollar index (DXY). However, this trend could be challenged in the coming weeks as options pricing suggests a potential shift around the election period. Currently, the one-month 25-delta BTC risk reversals show a skew of 1.20, highlighting a bullish outlook for the next four weeks, according to trading data from the Chicago Mercantile Exchange (CME), a key indicator of institutional activity.
The U.S. Presidential Election is scheduled for November 5, with results expected on November 8. A call buyer typically holds a bullish perspective, while a put buyer reflects bearish sentiment and aims to hedge against downside risks.
Election Contracts Favor Calls
Risk reversals for election contracts on Deribit, a leading crypto options exchange, also display positive values for calls, indicating strong demand. In contrast, the 30-day risk reversals for the euro-dollar (EUR/USD) pair show a value of -0.39 on the CME, signaling concerns about ongoing dollar strength in the coming weeks. Similarly, GBP/USD risk reversals suggest a parallel outlook.
Bitcoin Ignoring Dollar Strength
Interestingly, Bitcoin has started to disregard the dollar index’s fluctuations. The cryptocurrency reached nearly $68,000 on Monday, marking its highest value since July 29, even as the dollar index remained stable above 103.00. This resilience suggests that Bitcoin is charting its own path amid broader economic trends.
Market Optimism Surrounds Trump’s Potential Win
The current bullish sentiment around BTC coincides with increasing confidence in Republican candidate Donald Trump’s chances of victory. According to Jonathan de Wet, Chief Investment Officer at crypto liquidity provider Zerocap, “The upside convexity on a Trump win is worth being long. We see BTC/USD potentially reaching $70,000 in the coming weeks, building off current support levels as equities continue to hit new highs.”
Surge in Call Options Activity
Recently, traders have been aggressively purchasing call options, particularly at an $80,000 strike price. The demand for higher upside exposure is further emphasized by the popularity of the $100,000 call, which currently boasts an open interest exceeding $1 billion.
The Election as a Dominant Crypto Narrative
FRNT Financial noted in a recent newsletter that the U.S. election has become a crucial narrative for the crypto market over the past six months. Donald Trump’s favorable stance towards cryptocurrencies, which includes concrete policy proposals, contrasts with the ambiguity surrounding crypto regulations under a Kamala Harris administration.
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