If you're new to the crypto world, hold on tight. We're about to enter a rollercoaster of emotions, prices, and volatility.
Ethereum traders are anticipating much more significant price movements for Ether (ETH) compared to Bitcoin (BTC) as the US presidential election approaches. But why is this happening?
The Economic Context
A cryptocurrency analyst has noted that Ether could see an increase in expected price volatility, especially between October 25 and November 8. This period coincides with the US presidential election on November 5, and the election could have a “significant impact” on the price of ETH. The reason? Ethereum’s ties to the decentralized finance (DeFi) ecosystem, which could face increased regulatory scrutiny depending on who is elected president.
What Do the Numbers Say?
According to the data, traders are predicting a 68% chance of an ETH price swing between -14% and +16% three days after the election. And there is a 95% chance of a move between -26% and +35%. These numbers may seem overwhelming, but in the crypto world, big swings are part of the game.
Implied volatility chart of ETH vs BTC price. Source: Derive
At the time of writing, ETH’s forward volatility is 76.6%, while BTC’s is 69.8%. This indicates that traders are expecting a significant move during this period, with ETH showing increased sensitivity to external events.
And what about Bitcoin?
While Ethereum is facing a roller coaster ride, Bitcoin appears to be the stable coaster. Traders seem more confident in Bitcoin’s ability to withstand these macroeconomic events, likely due to its established position as a digital store of value and its relatively lower exposure to regulatory concerns compared to Ethereum.
As we approach the US election, ETH’s high volatility reflects traders’ expectations of increased uncertainty. These extreme moves are a direct reflection of traders’ expectations and the potential impact of the election on the crypto ecosystem.
So, if you are just starting out in the crypto world, be prepared for a ride full of ups and downs. Stay informed and remember that in the crypto world, volatility is the norm, not the exception.
