Bitcoin Options Traders Ignore US Election, Bet on $80,000 Target

Bitcoin Options Traders Ignore US Election, Bet on $80,000 TargetDespite the looming US presidential election, Bitcoin options traders are setting their sights on a much higher target: $80,000. Latest options trading data reveals a surge of bets, with traders confident Bitcoin will hit a new all-time high by the end of November, regardless of the election outcome

Bitcoin Options Traders Ignore US Election, Bet on $80,000 Target

Despite the looming US presidential election, Bitcoin options traders are setting their sights on a much higher target: $80,000. Latest options trading data reveals a surge of bets, with traders confident Bitcoin will hit a new all-time high by the end of November, regardless of the election outcome.

Implied volatility in Bitcoin options expiring around the November 5th election day has shown a marked increase, with traders exhibiting a clear preference for call options. These options grant the buyer the right, but not the obligation, to purchase Bitcoin at a set price in the future.

"I think the general market sentiment is that Bitcoin will be a good performer, regardless of the outcome of the election," said David Lawant, head of research at FalconX. "Our analysis shows a clear bullish bias in options activity surrounding the upcoming election."

Republican candidate and former President Donald Trump has been a vocal supporter of cryptocurrencies, making Bitcoin a so-called "Trump trade." In contrast, his Democratic opponent and current Vice President Kamala Harris has pledged support for a regulatory framework for the industry, a divergence from the Biden administration's crackdown on the sector.

Beyond politics, non-political factors like further interest rate cuts by the Federal Reserve are also seen as fuelling market optimism. Bitcoin's previous all-time high of $73,798 in March was spurred by the launch of US spot Bitcoin ETFs, boosting demand for the digital currency. While Bitcoin's bull run has since slowed, the cryptocurrency briefly climbed near $70,000 earlier this week and is up roughly 61% this year.

Data compiled by Deribit, the largest crypto options exchange, shows a declining ratio of put to call options for Bitcoin as the year-end approaches, with more traders buying call options than put options.

"We are seeing traders buy call options at about $68,000 and put options at about $66,000," said Yev Feldman, co-founder of SwapGlobal. "In other words, many are constantly repositioning themselves for further breakouts on both ends for Bitcoin. Yet, there are limited reasons for a significant drop in Bitcoin after the US presidential election, thus betting on the upside makes more sense."

The data shows that open interest for call contracts expiring on November 29th is concentrated around $80,000, with the second most popular strike price at $70,000. Call options expiring on December 27th have open interest concentrated around $100,000 and $80,000, while call options expiring on November 8th have a most popular strike price of $75,000. Additionally, the premium on Bitcoin call options compared to put options is also relatively high.

Jake Ostrovskis, an over-the-counter trader at Wintermute, wrote in a note on Monday, that option traders have been driving up the premium for call options on almost all contracts expiring beyond a day.

"This suggests that investors are more likely using the options market as a tool for capturing potential upside than as a hedge against downside risk," Lawant said. "For other crypto assets beyond Bitcoin, I think opinions are more divided. There is less consensus on how these alternative cryptos might perform under different election scenarios."

Lawant also noted that unlike other major events like the launch of spot Bitcoin ETFs and the halving, Bitcoin has historically displayed less volatility around election periods. However, volatility could shift as the election day approaches.