Bitcoin could see 3.5% election night price movement, analysts say

Traders are bracing for increased volatility in the bitcoin market on the night of the U.S. presidential election, with a potential 3.5% price swing on election night, according to analysts. "The crypto market is currently pricing in a plus or minus 3.5% in bitcoin spot movement on the election night itself," QCP Capital analysts said, adding that derivatives market data show traders are neglecting to position for potential downside risks after election night if the results are delayed or disputed.

In the options market, bullish sentiment appears strong, with many call options set to expire today featuring strike prices above $70,000. "With the U.S. election approaching, we are observing heightened market anticipation, we currently have approximately $3 billion in options open interest set to expire on November 8, with a notable focussed positioning of call options on bitcoin at strike prices of $70,000, $75,000, and $80,000, indicating relatively strong bullish sentiment," Deribit CEO Luuk Strijers told The Block.

However, QCP analysts cautioned that the low volatility premium beyond today’s expiry suggests markets may be underestimating volatility risks later in the week and beyond. "This suggests that markets expect a quick resolution, possibly underestimating potential delays or contested outcomes," QCP Capital analysts added in a report on Monday.

FalconX Head of Research David Lawant also observed low implied volatility for options expiring on the week of the election. “Unlike previous key events in 2024, where implied volatility expanded by at least 25 IV points, implied volatility ahead of the election has remained flat or even decreased over the past few months,” Lawant told The Block. 

Bitcoin dominance increases ahead of the U.S. election