As the US election enters the countdown and the Federal Reserve's interest rate decision is about to be announced this week, investors' risk appetite has significantly decreased and they are prepared for the expected volatility.
Data shows that the Deribit Bitcoin Volatility Index has reached its highest level since late July. Similarly, the MOVE index, which tracks the implied volatility of U.S. Treasuries, rose to its highest level since October 2023 on Friday.
Fed Watch data shows that traders expect the Federal Reserve to announce a rate cut at this week's meeting at a rate of 98%. Powell's speech after the meeting will also be the focus. His remarks will directly affect market expectations for future monetary policy and may cause market fluctuations.
According to Bitpush data, Bitcoin hovered above $68,500 that morning, but fell under pressure in the afternoon, hitting an intraday low of $66,803. The trading price at press time was $67,807, down 1.44% in 24 hours.
The altcoin market saw more declines than increases, with THOREChain (RUNE) falling 16%, Popcat (POPCAT) falling 12.6%, and Ponke (PONKE) falling 12.3%.
The current overall market value of cryptocurrencies is $2.21 trillion, and Bitcoin’s market share is 59.41%.
U.S. stocks closed lower that day, with the S&P, Dow Jones and Nasdaq falling 0.27%, 0.60% and 0.32% respectively.
Bitcoin options market shows mild optimism
In the options market, QCP Capital reported an increase in buying of $75,000 call options expiring at the end of November, reflecting growing demand for upside exposure. Election Day-related options also rose, with implied volatility surging, analysts noted.
Coinglass data shows that the current BTC open interest is 582,000, which is the same as the previous week and 10% higher than the level a month ago. This shows that investors are still increasing leveraged positions despite the recent uncertainty and price correction. Combined with the long and short data of top traders, this shows that even after Bitcoin soared above $73,500 on October 29, there is still a mild bullish sentiment, indicating that professional investors are optimistic about the long-term prospects of Bitcoin and are actively deploying.
Will there be a V-shaped reversal after testing $66,000?
Chart analysts believe that Bitcoin has fallen below the $68,500 level on the daily chart, with the next area to watch being around $65,000-66,000.
On-chain analyst Skew noted that during the latest bullish rally, the Bitcoin market witnessed “sustained demand” around $65,000-66,000, pushing prices to over $70,000 by the end of October.
Analysts said that Binance platform data showed that there was a large buying force in the $66,000-67,000 range, pushing the price of Bitcoin above $69,000. The high liquidity in this range indicates that market participants have strong support and resistance expectations for this price, and future price trends may fluctuate around this range.
As shown in the chart below, the $66,000-67,000 range has acted as key resistance several times before being breached, so this key area could support a V-shaped reversal for Bitcoin following the results of the US election.
“On the eve of Election Day, the market sees a Republican victory as positive for BTC, while a Democratic victory makes the outlook more ambiguous. The average betting odds for a Trump win have dropped from 64.9% to 56%,” Bitfinex analysts said.
They added: “Despite widespread expectations of heightened volatility ahead of the U.S. election on November 5, many market participants appear reluctant to act and are instead adopting a wait-and-see approach. Even with last week’s pullback, Bitcoin’s overall rebound from its September lows remains noteworthy. In short, current market dynamics point to an exciting week ahead. Whether you’re a trader, investor, or casual observer, the road to Election Day will not be dull for the cryptocurrency markets.”
Swan Bitcoin CEO Kippsten also expects volatility to surge. He said: "The recent surge in Bitcoin prices, which are close to all-time highs, can be attributed to investor optimism about the election, as both campaign teams are actively involved and a large amount of money is pouring into Bitcoin ETFs. Trump's victory may lead to a short-term rise in Bitcoin prices, possibly breaking through the $80,000 or $90,000 mark. If Trump fulfills his Bitcoin promise, this will help accelerate the adoption of Bitcoin by individuals, businesses and even nation-states."
He added: “A Harris win could lead to a more muted reaction, with Bitcoin prices likely to stabilize or see a more modest rally in the short term. A Harris administration would remain positive toward Bitcoin and would likely establish a friendly environment with greater legal and regulatory clarity.”
