- Crypto markets brace for volatility as U.S. election pressures stocks and treasuries.
- The “Trump trade” strategy gains momentum in crypto; a Harris win may reverse these trends, shaking markets.
- With possible extended volatility, Bitcoin is expected to fluctuate +/-3.5% on election night.
The market is in a state of anxiety when it comes to stocks, treasuries and crypto as the US is set to have one of the most contentious presidential elections in history. QCP Broadcast, a Telegram-based crypto insights service, recently published an analysis where it observed the resurgence of the “Trump trade” strategy. This strategy which involves taking long positions in the dollar, crypto assets and an expectation of higher Treasury yields has been backed by Trump’s good polling numbers in prediction markets.
The crypto market is gearing up for volatility with the current +/-3.5% range of Bitcoin (BTC) on election night. However, the analysts believe that traders may not fully appreciate the risks of extended post-election volatility. This absence of a volatility premium beyond November 8’s option expiration suggests that people anticipate a quick outcome. There is a possibility of overlooking the possibilities of delay or uncertainty, which could enhance the level of volatility.
Historic Crypto Market Volatility
Inevitably, it is going to be volatile, based on history. When Trump shocked the world by winning the 2016 election, U.S. futures dropped at first but then swiftly rose and the period became one of the most actively traded of the year. Likewise, in 2020, the election was only termed in favor of Joe Biden four days after the polls were conducted hence boosting trading volumes over the next six months. This experience suggests that there will be high market activity after this election.
Experts have also pointed out that the result of the congressional races could also affect crypto and other markets. Increased probability of fiscal deficits and a more aggressive Federal Reserve could be the outcome of a Republican sweep in the three elections – not suitable for risk assets. On the other hand a divided congress could imply a slow pace of change and markets and reduced volatility.
Bitcoin Braces for Election Impact
Currently, crypto options present a symmetric interest in calls and puts, with investors buying both, thus anticipating large price movements in both directions. Of course, all this does not mean that Bitcoin is entirely insulated from the “Trump trade.” BTC prices fell recently as spot ETFs experienced significant redemptions at the same time polls suggested that Harris is only slightly ahead in Iowa.
When the election results start coming in, experts expect the spot price of Bitcoin to change significantly. Crypto markets are waiting for any signs of changes that can affect the volatility, with traders ready for possible turbulence as the race results will be announced.
