Key Points
- Crypto market shows strong bullish sentiment with positive funding rates across all tokens and increasing open interest in call options, despite an expected calm period before the U.S. election.
- Short-term volatility has plunged significantly, with 7-day implied volatility showing sharp fluctuations, while 14-day tenor options have surged, creating a steep term structure in anticipation of the election.
Pre-Election Market Sentiment Shows Cautious Optimism
The cryptocurrency market is displaying a unique dichotomy as the U.S. presidential election approaches, according to a new report from Bybit and Block Scholes. Despite expectations of pre-election calm, traders are positioning themselves bullishly across the cryptocurrency spectrum, with Bitcoin’s potential ascent to $70,000 likely delayed until after November.
Widespread Bullish Positioning Across Crypto Assets
In a notable development, funding rates for perpetual contracts are showing consistent strength across all monitored cryptocurrencies, not just market leaders Bitcoin and Ethereum. This widespread positive sentiment marks the first clear indication of traders building positions ahead of the election, even as spot prices retreat from early October highs. The willingness to maintain leveraged long positions despite funding rate fees underscores the market’s underlying confidence.
Options Market Reveals Strategic Positioning
The derivatives market is painting a particularly interesting picture, with Bitcoin call options dominating open positions. The 14-day tenor options have experienced a notable surge in implied volatility, contrasting with the general downward trend seen across other tenors. This divergence suggests traders are specifically positioning for potential election-related market movements.
Volatility Structure Signals Market Caution
Perhaps the most telling indicator of market sentiment is the sharp decline in 7-day implied volatility, creating what analysts describe as a “notably steep term structure.” This unusual pattern indicates that while traders remain optimistic about crypto’s long-term prospects, they’re preparing for a period of reduced activity in the immediate term. The market appears to be holding its breath, with participants more focused on positioning for post-election movements rather than seeking short-term gains.
