Options traders in the market are increasing bets that the cryptocurrency will reach 80,000 dollars by the end of November, regardless of who wins.
In recent weeks, bitcoin has become a thermometer for glimpsing the possible outcome of the U.S. elections. Analysts and experts believe that the rally of the pioneering cryptocurrency is partly due to polls and bets on the elections, which give the advantage to Republican candidate Donald Trump, who is closer to the crypto community. However, options traders seem not to follow the political dynamics: in fact, they are increasing bets that bitcoin will surpass its historical high and reach 80k dollars by the end of November, regardless of who wins the elections. It is currently sitting at 72k dollars.
Options traders are investors who buy and sell options contracts in the financial market. These give them the right (but not the obligation) to buy or sell an asset, such as a stock or a cryptocurrency, at a predetermined price before a specified expiration date. In this way, traders can speculate or also hedge against extreme volatility of digital currencies: for this reason, they have become popular among these investors, as they allow exposure to that market without having to own the asset. The most common strategy includes call options and put options: traders buy calls if they believe the asset's price will rise. They have the option to buy at this fixed price if the market price is above it, and obtain the difference. Conversely, they buy puts when they think the asset's value will decrease: in this case, they have the right to sell it at a fixed price and make a profit if its value falls below that price.
In the case of bitcoin, the implied volatility (the cost of hedging against risk) of the cryptocurrency options expiring on election day is high, with a market where more call options are traded than put options: according to data from the largest cryptocurrency options exchange Deribit collected by Bloomberg, the put-to-call ratio (an important indicator for determining market trend, resulting from dividing the number of put options by call options) is decreasing towards the end of the year. This means that the market is bullish and that the price of the cryptocurrency is expected to rise in the future.
And in this context, the most traded contract is a call option with a strike price of 80,000 dollars and expiration on November 29. It is the contract that has the most open positions, a metric used in futures and options markets to indicate the total number of contracts in circulation that have not been closed or settled. The second most popular contract for these options is the call with a price of 70,000 dollars. For call options expiring on December 27, on the other hand, the most traded call contract is around 100,000 and 80,000 dollars.
The bullish sentiment in the market would indicate that investors are positive about the victory of any candidate. Donald Trump has focused on the crypto world to garner votes and funding: he paid for hamburgers in bitcoins, announced that he intends to make the U.S. the capital of cryptocurrencies, and has also launched the project of crypto World Liberty Financial. But the vice president and Democratic candidate Kamala Harris has also shown an openness towards the crypto community, promising regulation of the industry, in contrast to the rejection and repression that the sector has reported during Joe Biden's mandate.
Mireya Fernández, head of Bitpanda for Southern Europe and CEE, states that the focus of the debate should not be so much on whether Trump or Harris are better candidates, but on the ever-growing influence that digital assets have gained in both parties. “Regardless of who is elected, it is likely that we will see pro-crypto policies coming out of the White House and, most importantly, the uncertainty will dissipate,” she asserts. For the expert, long-term confidence is what will guarantee the good performance of bitcoin: “I believe that 80,000 dollars is an achievable price for this year, and with the right conditions, it could even exceed that figure.”
In contrast, Javier Pastor, director of OTC and Training at Bit2Me, distances himself from this interpretation. He is one of those who believes that by the end of the year, bitcoin could reach 100,000 dollars, but he considers that the U.S. elections will be part of the impetus for the good performance of the digital currency. And its outcome matters: “In principle, the position of all those citizens who have cryptos in the U.S. makes one think that they want Trump to win, and we are talking about 50 million people,” he warns.
Whatever the outcome, the expert believes that the elections represent an opportunity to regain the leadership that the U.S. has lost in the crypto world. “During the last administration of Biden and Kamala, there have been quite a few attacks and belligerence, and there has been no clarity from the SEC to create a favorable environment for the development and security of the ecosystem. Gary Gensler has taken a very aggressive and rigid position when it comes to determining and defining what crypto assets are, what bitcoin is, and what the role of exchanges is,” he asserts.
After a very weak start to the month, bitcoin has experienced a rally that has brought it closer to its historical highs from last March, when it reached 73,157.29 dollars. For the year, the pioneering cryptocurrency is up 60%. Alongside the U.S. elections, record inflows into ETFs have been a factor driving increases in this digital asset. Manuel Villegas, Digital Assets Analyst at Julius Baer, explains that in recent weeks there has been sustained demand for these products, averaging nearly 110 million dollars over the last 20 days. Eric Balchunas, Bloomberg's ETF analyst, puts these figures into context: “Gold ETFs took about five years to reach that figure.”
