As the US presidential election approaches, options traders are increasingly betting that Bitcoin will soar to a record high of $80,000 by the end of November, regardless of the election’s outcome. The implied volatility for Bitcoin options set to expire around November 5 is notably elevated, with a significant skew towards call options, which allow buyers to purchase the cryptocurrency at anticipated new highs.
Bitcoin Traders Expect New ATH
David Lawant, head of research at crypto prime broker FalconX, noted that market sentiment appears optimistic. “I believe the market consensus is that Bitcoin is likely to perform well regardless of the election outcome,” he stated, highlighting a distinct topside-heavy bias in options activity surrounding the election.
The political landscape adds another layer of complexity. Republican candidate and former President Donald Trump is openly pro-crypto, leading some to perceive Bitcoin as a “Trump trade.” In contrast, Democratic candidate Vice President Kamala Harris has pledged to support a regulatory framework for the cryptocurrency industry, although this stands in stark contrast to the more restrictive measures seen during the Biden administration. Meanwhile, external factors such as potential rate cuts by the Federal Reserve and ongoing inflation concerns are also fueling optimism in the market.
Bitcoin previously reached an all-time high of $73,797 in March, driven by soaring demand linked to newly launched Bitcoin exchange-traded funds (ETFs). However, the price experienced a decline of over 30% by early August before embarking on its current bullish trajectory. As of Monday, Bitcoin was trading around $66,800 after peaking at $69,474.
Data from Deribit, the largest crypto options exchange, indicates a declining put-to-call ratio, with more traders opting for call options. Yev Feldman, co-founder of SwapGlobal, remarked, “We see traders buying calls near $68,000 and puts near $66,000, suggesting a continuous positioning for a breakout.” He added that a downward shift post-election seems unlikely, making upward movement more plausible.
Open interest for call contracts in Bitcoin expiring on November 29 is heavily concentrated around the $80,000 mark, with the second most popular strike price at $70,000. For calls expiring on December 27, open interest clusters around $100,000 and $80,000, while the most favored strike price for calls expiring on November 8 is $75,000.
The market dynamics show that call options are commanding higher premiums relative to puts, reflecting a trend where investors are leveraging the options market more for potential upside rather than hedging against risks. Lawant emphasized, “This indicates that investors are leveraging the options market more as a tool for capturing potential upside rather than as a hedge against downside risks.”
