As the US presidential elections draw near, Bitcoin [BTC] options traders are showing optimism, aiming for an $80K target by November.
The upcoming election has introduced a level of uncertainty into the market, noticeable through a significant increase in forward implied volatility (FWD IV) by November 8th, reaching nearly 71%.
This surge in volatility signals an anticipation of substantial price fluctuations surrounding the elections, prompting institutional investors to protect their positions from potential risks.
Analysts predict that market volatility will gradually decrease following two key events: the elections on November 5th and the Federal Reserve rate decision on November 8th, leading to a decline in FWD IV post the latter date.
Optimistic Market Sentiment
Despite the election-related uncertainties, the BTC options market continues to display an optimistic outlook, as highlighted recently by crypto trading firm QCP Capital. The firm remarked,
“Short-term implied volatility is at its peak on election day expiry, showing a 10-vol spread from the previous expiry. Furthermore, the skew favors calls over puts, despite BTC currently trading about 8% below its all-time highs.”
Current data from Deribit also reinforces this positive sentiment, with call options (reflecting bullish expectations) outnumbering put options (indicating bearish sentiments) for contracts expiring by November 29th.
Traders in the options market are assessing a 20% likelihood of BTC reaching $80K by the end of November.
André Dragosch, head of European research at Bitwise, interpreted this positioning as an anticipation of a ‘bullish outcome.’
“The prevailing belief among bitcoin options traders appears to favor a bullish outcome.”
On the political front, Donald Trump has shown strong support for cryptocurrencies and currently maintains a 20-point lead over Kamala Harris in polls, as indicated by the prediction site Polymarket.
If Bitcoin were to surge to $80K and surpass the $70K psychological barrier, it could trigger a significant squeeze on approximately $7 billion worth of short positions.
Nevertheless, BTC has experienced a minor dip in the short term amid the ongoing US earnings season. At the time of reporting, BTC was valued at $67K, around 10% lower than its all-time high (ATH) of $73.7K.