Option traders are betting that Bitcoin will break through $80,000 by the end of November, despite the uncertainty surrounding the U.S. presidential election. The options market is showing a clear bullish bias towards the upcoming election. Bitcoin hit a historical high of $73,798 in March this year, and has since risen by about 61%. Data shows that open interest in call options expiring on November 29 is concentrated at $80,000, indicating optimism in the market about Bitcoin's future performance
Option traders are increasing their bets, expecting Bitcoin to hit a historical high of $80,000 by the end of November regardless of the outcome of the U.S. presidential election.
Bitcoin options expiring around the election day on November 5 have a high implied volatility, with a bias towards call options, giving the buyer the right to buy cryptocurrency at a higher price.
David Lawant, research director at cryptocurrency market maker FalconX, said, "The market consensus is that regardless of the election outcome, Bitcoin may perform well. Our analysis shows that there is a clear bullish bias in options activity surrounding the upcoming election."
Republican candidate and former President Trump openly supports cryptocurrencies, to the extent that Bitcoin is seen as a "Trump trade." His Democratic opponent, current Vice President Harris, has pledged to support regulatory frameworks for the industry, contrasting with the Biden administration's crackdown on the industry. Non-political factors such as further Fed rate cuts are seen as fueling optimism.
Bitcoin hit a historical high of $73,798 in March this year when the U.S. launched a spot Bitcoin ETF, driving demand for the digital currency, but the Bitcoin bull market has since eased.
Earlier this week, the largest cryptocurrency approached $70,000 before pulling back. The token has risen about 61% this year.
According to data compiled by the largest cryptocurrency options exchange Deribit, the ratio of put options to call options on Bitcoin has been declining towards the end of the year, with more traders buying call options than put options.
Yev Feldman, co-founder of SwapGlobal, which provides derivatives such as swaps and options to U.S. digital asset investors, said, "We see traders buying call options near $68,000 and put options near $66,000, meaning many are constantly adjusting their positions for Bitcoin to break further in either direction, however, there are limited reasons for Bitcoin to drop significantly after the U.S. presidential election, making betting on an increase more meaningful."
Data shows that open interest in call contracts expiring on November 29 is concentrated around $80,000, with the second most popular strike price at $70,000. Data also shows that open interest in call options expiring on December 27 is concentrated around $100,000 and $80,000, while the most popular strike price for options expiring on November 8 is $75,000.
Open interest in call options expiring on November 29 is concentrated around the $80,000 strike price
Additionally, the premium of Bitcoin call options relative to put options is relatively high. Jake Ostrovskis, an OTC trader at Wintermute, wrote in a report on Monday that at higher levels **, options traders are driving up the premium of call options for contracts expiring beyond one day Lawant said, "This indicates that investors are using the options market more as a tool to capture potential upside rather than as a hedge against downside risk. As for other cryptocurrencies besides Bitcoin, I think opinions are more divided. There is less consensus in the market on how these alternative cryptocurrencies may perform in different election scenarios."
Lawant stated that unlike other major events such as the launch of spot Bitcoin ETFs and halving, the volatility of Bitcoin around the election is generally lower. However, as the election day approaches, volatility may change