With the U.S. presidential election days away, crypto market experts are forecasting significant volatility for bitcoin (BTC), with projections indicating a potential price swing between $6,000 and $8,000. Analysts believe this surge in volatility will mirror bitcoin’s dramatic movements seen in early August.
Greg Magadini, director of derivatives at crypto analytics platform Amberdata, anticipates a “+1.5-sigma” fluctuation in bitcoin’s price, corresponding to this projected range. This estimate is based on an annualized forward volatility rate of 112% from the Nov. 6 options trading data on Deribit, suggesting price moves of up to $4,000 in either direction from BTC’s current rate of around $68,800.
The election’s uncertainty is fueling this forecast, as the race between Republican candidate Donald Trump, known for his crypto-friendly stance, and Democratic candidate Kamala Harris remains tight in key swing states. Although markets don’t expect any extreme price movement (a 3-sigma move), analysts suggest significant volatility is still likely, with options traders leaning toward bullish price action.
Call options, which are bets on higher prices, are trading at a premium over put options on platforms like Deribit and the Chicago Mercantile Exchange. Joshua Lim, co-founder of crypto derivatives trading firm Arbelos Markets, highlighted that BTC call options for $70,000, $85,000, and $90,000 strikes have seen strong demand as traders brace for volatility ahead of the Federal Reserve’s rate decision on Thursday and the anticipated election outcome on Friday.
Meanwhile, Ethereum (ETH) traders are preparing for even higher volatility. Data from decentralized exchange Derive shows that ETH could experience a price swing of up to 10%, or around $247 at its current market rate of $2,470. While BTC’s expected volatility ranges from 8.97% to 9.85%, ETH historically experiences larger fluctuations.
In on-chain options trading, sentiment appears bullish. As of Sunday, call option open interest reached 1,179 contracts, compared to 885 for put options. This interest ratio suggests a strong bias towards higher prices, reflecting the strategic positions traders are adopting to navigate the anticipated volatility spike.
With these dynamics at play, crypto market participants are closely monitoring key events this week, making it a pivotal period for traders leveraging advanced hedging strategies in the lead-up to the U.S. election.
