Post-Election Optimism: Bitcoin Call Options Surge Ahead of U.S. Election, Hinting at Potential Price Upswing

• As the U.S. presidential election approaches, derivatives traders are increasingly optimistic about bitcoin’s price trajectory, with significant call options activity signaling bullish sentiment.

• Deribit CEO Luuk Strijers highlighted that there are currently twice as many bitcoin call options compared to put options for the upcoming Nov. 8 expiry, indicating strong market confidence.

• Strijers noted, “For the 8 November options expiry there is an Open Interest of over $2 billion with $70,000, $75,000, and $80,000 as the dominant strikes, with a put-call ratio at 0.55.”

This article explores the bullish sentiment among derivatives traders regarding bitcoin’s price leading up to the U.S. election, highlighting critical options market activities.

Market Sentiment Surges Ahead of U.S. Presidential Election

In the days leading up to the U.S. presidential election on November 5, bitcoin derivatives traders are positioning themselves for a potential price spike. According to Strijers, the options market is witnessing an unprecedented level of activity, with a clear bullish outlook reflected in the data. The prominent stance in the call options market—where bets are placed on rising prices—signals that traders expect significant upward movement in bitcoin’s value in the wake of the election results.

Call Options Outnumber Puts: What It Means for Bitcoin

The recent data showcases a noteworthy put-call ratio at 0.55, emphasizing that there are more calls than puts for the November 8 options expiry. This metric suggests a robust demand for calls, which indicates investors are largely betting on bitcoin’s price moving up. Strijers explained that the forward implied volatility stands at 72.29%, hinting at a potential price swing of approximately 3.78% shortly after the election. “There is a clear elevation in Forward IV compared to Mark IV, particularly during the election week,” he mentioned.

Optimistic Predictions from Market Leaders

The bullish sentiment surrounding bitcoin’s options market was further corroborated by Joshua Lim, CEO of Arbelos Markets. Lim noted an uptick in market participants seeking post-election expiry call options at strike prices ranging from $70,000 to $80,000. “This strategy signals expectations of a potential upward price breakout in bitcoin’s market trajectory,” Lim stated, indicating that the moves on the options market may foreshadow significant price changes in the cryptocurrency.

How Bitcoin is Positioned as an Inflation Hedge

As traditional markets react to the implications of the U.S. presidential election, bitcoin is increasingly perceived as a hedge against inflation and systemic risk. Strijers pointed out that the market does not expect prolonged uncertainty despite heightened volatility around the election. “The demand for call options relative to puts shows that investors are less concerned about managing downside risk,” he remarked. Lim added that experts are pricing in a 7% market move expected on election day, which may be conservative given bitcoin’s historical volatility in response to macroeconomic events.

Standard Chartered’s High Price Forecast

Geoff Kendrick, Global Head of Digital Assets Research at Standard Chartered, also expressed optimism about bitcoin’s price trajectory, predicting it could approach its all-time high of over $73,000 on the election day itself. Kendrick’s analysis hinges on a detailed examination of both bitcoin derivatives and trading volume metrics, leading him to assert, “Our base case is that the bitcoin price will be around $73,000 on election day,” based on the current market dynamics.

Conclusion

In conclusion, as the U.S. presidential election draws near, the prevailing sentiment among bitcoin derivatives traders suggests a bullish outlook for the cryptocurrency. The significant increase in call options, anticipated volatility, and expert predictions collectively point towards a potential rally in bitcoin’s value following the election. Traders remain vigilant as they navigate the intricacies of the market, eyeing opportunities amidst the ever-changing financial landscape.