The upcoming U.S. elections are causing a stir in the cryptocurrency markets, with institutional investors gearing up for potential volatility in Bitcoin prices, according to experts. Joshua Lim from Arbelos Markets noted a significant increase in call option buying on CME bitcoin futures, indicating a bullish stance leading up to the election.
In addition to this, Sidney Powell, co-founder of Maple Finance, highlighted rising borrowing activity in the crypto credit markets as investors anticipate price fluctuations around the time of the election. Short-term borrowing rates on institutional crypto lending platforms have been climbing as the election date approaches, with larger institutions showing interest in borrowing against open trade credit.
Prime brokerage firms and over-the-counter desks are among the key players positioning themselves for potential market movements, either by providing margins to clients or taking leveraged long positions in anticipation of a bullish market trend. Derivatives markets also reflect this sentiment, with CME options trading experiencing heightened activity as institutional players allocate funds to crypto assets ahead of the elections.
Lim mentioned that over $350 million worth of November calls were traded in the past week on the CME, with a breakeven price of around $79,300 by the end of November expiry. This suggests that traders are optimistic about Bitcoin’s price trajectory in the coming month and are positioning themselves accordingly.
Overall, the heightened activity in call options and borrowing in the crypto credit markets indicates a growing interest from institutional investors in cryptocurrencies as a potential hedge or investment opportunity during times of market uncertainty, such as the upcoming U.S. elections. As the crypto asset class continues to mature, funds dedicated to crypto strategies are expected to increase, further solidifying the presence of institutional players in the digital asset space.
