The options market is seeing a surge in bets that Bitcoin will hit a new record high of $80,000 by the end of November, regardless of the outcome of the U.S. presidential election. Implied volatility on Bitcoin options contracts expiring on Nov. 5 has surged, with demand for call options that give buyers the right to buy the currency at record levels increasing.
Bitcoin is now trading at around $67,000, down 0.7% in the last 24 hours, after coming close to breaching the $70,000 level a few days ago.
Bitcoin Performance Forecast
David Lawant, head of research at crypto broker FalconX, explained that the market expects the cryptocurrency to perform positively regardless of the election results. Lawant added that analysis of options activity shows a clear bullish bias, as demand for Bitcoin is believed to continue to grow.
In the US presidential election, Republican candidate Donald Trump is known to be a proponent of cryptocurrencies, while Democratic Vice President Kamala Harris has pledged to support a regulatory framework for the sector, which is different from the scrutiny policy adopted by the Biden administration. In addition to political factors, there are growing expectations of further interest rate cuts by the Federal Reserve, which is boosting optimism about Bitcoin’s performance.
Bitcoin's past performance$BTC
In March, Bitcoin hit an all-time high of $73,797 after a period of sustained growth. However, the price then fell by more than 30% by August, before resuming its climb. Bitcoin, which last traded at $70,000 on June 12, has jumped about 60% this year
Data suggests that longs outnumber shorts as the year ends, with traders buying more call options. According to SwapGlobal co-founder Eve Feldman, traders are constantly repositioning their positions in anticipation of potential market trends, with a general bullish bias after the election.
Open interest, the total amount of outstanding contracts, for the call contracts expiring on November 29 is concentrated around $80,000, with the second most common strike price at $70,000. Open interest for the call contracts expiring on December 27 is distributed between $100,000 and $80,000, while the most common strike price for the call contracts expiring on November 8 is $75,000, the data shows.
Increase in premiums on purchase contracts
Under the skewed structure of the market, investors demand a higher premium on calls than on puts. Options traders have raised premiums on these contracts in almost all periods, notes Jake Ostrowskis of Wintertermute.
Lawant noted that investors are using the options market as a tool to capitalize on potential upside in Bitcoin, rather than as a hedge against downside risk. He added that the market remains divided on how other cryptocurrencies will perform under different election scenarios.
While major events like the launch of Bitcoin ETFs and the “halving” have been highly volatile, election-related volatility seems to have been less severe so far, but things are likely to change as the election approaches.