Bitcoin Expected Volatility Rises Amid Concerns Over US Presidential Election
Participants in the cryptocurrency and traditional markets are expecting a surge in volatility amid the US presidential election. Bitcoin’s monthly expected volatility has risen to a two-week high of 59% over the past three days, according to Skew analytics platform.
“Bitcoin price will be influenced by the US election results,” Stack Funds co-founder Matthew Dibb told CoinDesk. – We expect the cryptocurrency to trade on increased volatility in the coming days. The same phenomenon is reflected in the expected volatility in the options market “.
Expectations of increased volatility in the short term are driven by concerns that the election results may be challenged, which in turn will lead to a period of political and economic uncertainty..
At the same time, the six-month indicator is stable at 60%. In other words, the market does not expect uncertainty to persist for long..
Alpha5 trader Vishal Shah states that a 10-point rise in implied volatility is moderate. By comparison, the expected seven-day volatility in the RMB market has doubled over the past week to its highest since 2011. Similar dynamics is observed in the euro and yen markets.
Advanced traders simultaneously buy put and call options to hedge positions in the spot market if they see a stage of uncertainty ahead, which leads to an increase in expected volatility. Traditional markets are expected to decline if election results are mixed. After the situation stabilizes, the rise in negative bond rates around the world could force investors to enter Bitcoin in search of increased yields.
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