Option traders are betting that Bitcoin will reach $80,000 after the U.S. election. The implied volatility of Bitcoin options near the election day on November 5th is high, indicating a clear upward trend. The head of research at the leading cryptocurrency prime broker FalconX stated that Bitcoin may perform well regardless of the election outcome. After a recent pullback, Bitcoin has risen again, with the current price at around $66,800, representing a year-to-date increase of about 60%
Option traders are increasing their bets that Bitcoin will reach a record high of $80,000 by the end of November, regardless of who wins the U.S. presidential election.
The implied volatility of Bitcoin options expiring around Election Day on November 5 is high, with bets leaning towards call options that give buyers the right to buy at a new high price.
"I believe the market consensus is that Bitcoin may perform well regardless of the election outcome," said David Lawant, research director at cryptocurrency prime broker FalconX. "Our analysis shows a clear bias towards bullish activity surrounding the upcoming election."
Open call options contracts expiring on November 29 are concentrated around an $80,000 strike price.
Republican candidate and former President Trump openly supports cryptocurrencies, leading Bitcoin to be seen as a so-called Trump trade. Democratic rival Vice President Harris, on the other hand, supports establishing regulatory frameworks for the industry. These contrast sharply with the Biden administration's crackdown on the industry. Further interest rate cuts by the Federal Reserve and non-political factors such as inflation are also believed to fuel optimism.
In March of this year, Bitcoin reached a historical high of $73,797 after weeks of continuous surge, as investors optimistically anticipated demand for Bitcoin ETF issuance to exceed supply. After hitting a new high in March, Bitcoin fell over 30% by early August before embarking on the current bull market.
The largest cryptocurrency briefly rose to $69,474 on Monday before falling back to around $66,800. The last time Bitcoin reached $70,000 was on June 12, with a cumulative increase of about 60% since the beginning of the year.
The data compiled by Deribit, the largest cryptocurrency options exchange, shows a decreasing ratio of put options to call options towards the end of the year, with traders buying more call options than put options.
"We see traders buying call options around $68,000 and put options around $66,000, in other words, many are continuing to build positions or adjust positions to guard against a breakout in either direction," said Yev Feldman, co-founder of SwapGlobal, which provides derivatives such as swaps and options to U.S. digital asset investors. "There are limited reasons for a post-election decline, so an increase is more reasonable."
Open call options contracts expiring on November 29 are concentrated around an $80,000 strike price, followed by call options with a $70,000 strike price. Data shows that open call options contracts expiring on December 27 are concentrated around $100,000 and $80,000 strike prices, while the most popular call options expiring on November 8 have a $75,000 strike price.
