In its latest analysis, QCP Capital reported heightened market anxiety across stocks, bonds, and cryptocurrencies ahead of the U.S. presidential election. Market watchers note that former President Donald Trump’s lead in prediction markets is impacting trading strategies, with long positions in the dollar, crypto, and expectations of rising Treasury yields gaining traction before the election. However, a win by Vice President Kamala Harris could potentially reverse these trends, causing overnight market fluctuations.
The crypto options market projects Bitcoin will experience up to a 3.5% price swing on election night, though traders may be underestimating post-election risk.
Volatility premiums on contracts expiring after November 8 remain low, signaling that many expect a quick resolution to the race.
Bitcoin is considered part of the “Trump trade,” given the former president’s pro-crypto stance. On Monday, as polls showed Harris with a slight lead, Bitcoin spot prices dipped, and spot ETFs saw significant outflows.
Reminiscent of 2016, when Trump’s unexpected win initially caused U.S. futures to plunge before rebounding, QCP anticipates heavy Bitcoin trading as results roll in.
QCP pointed out that in 2020, trading volumes peaked at a six-month high after it took four days to officially declare Joe Biden the winner. As voting results unfold, Bitcoin prices are expected to experience substantial swings, signaling a volatile trading period.
