Bitcoin (BTC) Set for Volatility as Election Day Begins

According to recent findings by QCP Capital, anxiety levels are rising across stock, bond, and cryptocurrency markets as the U.S. presidential election draws near.

Market participants are reacting to former President Donald Trump’s lead in prediction markets, which has prompted traders to adopt long positions in anticipation of rising values for the dollar, cryptocurrencies, and Treasury yields. However, should Vice President Kamala Harris secure a victory, these trends could rapidly reverse, resulting in sudden shifts across financial markets.

The crypto options market is forecasting a potential 3.5% price swing for Bitcoin on election night, but experts warn that investors might be underestimating the volatility that could follow. Current volatility premiums on contracts set to expire after November 8 suggest a general expectation of a quick outcome in the election.

Bitcoin’s status as a favored asset in the “Trump trade” aligns with the former president’s supportive views on cryptocurrencies. Following recent polling that indicates a slight edge for Harris, Bitcoin spot prices dipped, alongside noticeable outflows from spot ETFs.

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This situation mirrors the events of 2016, when Trump’s surprise victory initially led to declines in U.S. futures, only to see a subsequent rebound. QCP anticipates a flurry of Bitcoin trading activity as the election results start coming in, reminiscent of the spike in trading volumes observed just days after Joe Biden was declared the winner in 2020.

As voting outcomes begin to emerge, Bitcoin is likely to experience significant price fluctuations, signaling a period of instability and active trading ahead.

Kostadin Dimitrov