Ahead of the US presidential elections, volatility in the cryptocurrency market remains low. Investors’ adoption of a “wait-and-see” approach stands out as an important point underlined in Bitfinex’s latest Alpha report. According to the report, Bitcoin’s implied volatility in the options market is hovering around 40%, indicating that investors are avoiding major price movements and maintaining a generally cautious stance.
Cryptocurrency volatility is at low levels
Bitfinex analysts state that volatility is low due to the cautious attitude of investors, but there may be sudden changes in prices between November 5 and November 8, during the election week. According to analysts’ projections, the increase in volatility during the election week may create sharp movements in the price of Bitcoin. However, if a clear direction is not determined in the market, it is predicted that these changes may be limited to reactive transactions only and it may be difficult to form a permanent trend.
The report also states that recent corrections in Bitcoin and altcoin prices reflect deep concerns on the market, and the expected approval process for spot Bitcoin exchange-traded funds (ETFs) could lead to a new fluctuation in the market. It is considered that developments regarding ETF approval may have an impact on market sentiment and may increase transaction volumes, especially with open interest at near record levels in Bitcoin.
What is the latest situation in the options market?
Analysts’ evaluations about the options market also contain important clues about the future of the market. The report draws attention with strong put purchases as well as an apparent indifference to price movements. This situation is considered as an indicator that the market has a general downward trend. While Bitcoin is expected to rise in this process, these decline signals observed in the options market show that investors prefer to remain cautious. According to analysts, the current uncertainty environment indicates that prices may remain under downward pressure unless there is a strong catalyst in the market.
In addition, Bitfinex analysts suggest that the investment strategy referred to as the “Trump trade” may end after the elections. While this narrative is associated with Bitcoin gaining increasing attention during the Trump era, it is a matter of curiosity how the new administration’s approach to cryptocurrencies will affect this market. Not only Bitcoin but also the altcoin market has entered a turbulent period regardless of the US elections. Analysts state that altcoins, especially Bitcoin and Ethereum, carry a strong risk of decline. Bitcoin’s market dominance has reached 60.5% and this rate continues to increase.
This means that altcoins other than Bitcoin cannot attract enough market attention. It is stated that altcoins, especially those outside the top 10 cryptocurrencies, have lost approximately 45% of their value since March. Bitfinex analysts state that the altcoin market needs a strong catalyst to recover in the short term. However, investors’ apathy and general risk aversion make such a recovery difficult. According to analysts, the altcoin market will continue to remain under Bitcoin’s current dominance and further declines may be inevitable for many altcoins outside the top 10.
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