(Bloomberg) -- Options traders are increasing bets that Bitcoin will reach a record high of $80,000 by the end of November no matter who wins the US presidential election.
The implied volatility for Bitcoin options coming due around the Nov. 5 election day is elevated, with the wagers skewed toward call options that give the buyer the right to buy the cryptocurrency at new highs.
“I believe the market consensus is that Bitcoin is likely to perform well regardless of the election outcome,” said David Lawant, head of research at crypto prime broker FalconX. “Our analysis shows that options activity surrounding the upcoming elections exhibits a notable topside-heavy bias.”
Republican candidate and former President Donald Trump is avowedly pro-crypto, so much so that Bitcoin is viewed as a so-called Trump trade. Democratic rival Vice President Kamala Harris has vowed to support a regulatory framework for the industry. That contrasts with a crackdown on the sector under the Biden administration. Non-political factors such as further rate cuts by the Federal Reserve and inflation are seen contributing to the optimism.
Bitcoin reached an all-time high of $73,797 in March after surging for weeks amid optimism that demand stemming from the Bitcoin exchange-traded funds launched this year would overwhelm the amount of tokens available for sale. The price subsequently retreated by more than 30% by early August, before embarking on its current bull market run.
The largest cryptocurrency rose as high as $69,474 on Monday, before paring the gains to trade around $66,800. Bitcoin, which last traded at $70,000 on June 12, has jumped about 60% this year.
The put-to-call ratio is trending lower toward the end of the year, with more traders buying call options than puts, according to data compiled by the largest crypto options exchange Deribit.
“We see traders buy calls near 68k and puts near 66k, in other words, many continuously position and reposition for a breakout for either end,” said Yev Feldman, co-founder at SwapGlobal, which provides derivatives such as swaps and options, to the US digital-asset investors. “There is limited reason to collapse downwards after the election, so up makes more sense.”
The open interest, which is the total amount of outstanding contracts, for the call contracts expiring on Nov. 29 is concentrated around $80,000 with the second most popular strike price at $70,000. The open interest for the calls expiring on Dec. 27 is clustered around $100,000 and $80,000, while the most popular strike price of the calls expiring on Nov. 8 is at $75,000, the data shows.
Call options are also commanding relatively higher premiums compared to their put counterparts based on the skew term structure, which indicates the pricing dynamics between calls and puts. At a higher level, options traders have driven call premiums across nearly all tenors beyond one-day expiration contracts, Jake Ostrovskis, an over-the-counter trader at Wintermute, wrote in a Monday note.
“This indicates that investors are leveraging the options market more as a tool for capturing potential upside rather than as a hedge against downside risks,” Lawant said. “For non-Bitcoin crypto assets, I see opinions more divided. The market shows less consensus on how these alternative cryptocurrencies might perform under different electoral scenarios.”
Unlike other major events such as the launch of Bitcoin ETFs and the halving, volatility before and after the election is muted, though it may change as the date nears, Lawant said.
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