Bitcoin is expected to see a lot of ups and downs in the coming weeks as a result of a combination of factors, including the upcoming US elections, the “Trump trade” narrative, and the typically strong performance of Bitcoin in the fourth quarter, according to a recent report from Bitfinex.
Leading up to the elections, Bitcoin has already experienced significant price swings, with a 6% correction last week after nearly reaching $70,000. Analysts at Bitfinex anticipate even more volatility as the election date approaches, especially with the uncertainty surrounding the potential outcomes of a Republican or Democratic victory.
The options market is also expected to see increased activity and volatility as election results become clear around Nov. 6 and Nov. 8. The report notes that Bitcoin’s implied volatility levels are already quite high, with strike prices above $100,000 suggesting IV levels above 100. This heightened volatility could lead to sharp price movements in the coming weeks.
Despite recent corrections, Bitcoin has shown strength in the fourth quarter, historically a bullish period for the cryptocurrency, especially in halving years. This year, Bitcoin is up over 30% from its September lows, with a remarkable 7.29% gain last month. While October’s performance may be impacted by pre-election jitters, historical data shows an average gain of 31.34% in the fourth quarter, indicating potential bullish momentum.
The so-called “Trump trade” effect is also influencing Bitcoin’s performance, with factors such as macroeconomic conditions and betting odds favoring Trump’s re-election contributing to market uncertainty. Recent data from RealClearPolitics and Polymarket suggest a high probability of Trump winning, adding to the already volatile market conditions.
Overall, Bitcoin investors and traders should brace themselves for a period of increased volatility as various factors converge to create a potentially turbulent market environment. Keeping a close eye on market developments and being prepared for sharp price movements will be crucial in navigating the coming weeks.