Bitcoin anticipated to experience significant fluctuations as ‘Trump trade’ and fourth-quarter seasonality align – Bitfinex

Bitcoin (BTC) is anticipated to encounter a period of significant volatility in the upcoming weeks, driven by election uncertainties, the “Trump trade” narrative, and historically advantageous conditions in the fourth quarter, creating a “perfect storm” for market fluctuations, as outlined in the latest “Bitfinex Alpha” report.

The report indicated that leading up to the US elections, Bitcoin has already exhibited “whipsaw” price movements following a 6% decline last week after nearing $70,000.

As the election date draws nearer, Bitfinex analysts predict that volatility will escalate, particularly due to the prevalent belief that a Republican win could enhance market conditions, while a Democratic victory may yield more uncertain outcomes.

Options markets are also affected

Option premiums and expected daily volatility for both the US stock market and Bitcoin are anticipated to increase as election results are projected around Nov. 6 and Nov. 8.

The report further noted that Bitcoin could face even greater volatility as traders assess potential market changes linked to the election results, especially if former US president Donald Trump is re-elected, given his outspoken support for cryptocurrency.

Moreover, the implied volatility (IV) curve indicates increased expectations, with Bitcoin’s Nov. 8 strike prices suggesting IV levels exceeding 100 for options with strike prices above $100,000.

Elevated IV typically raises option prices as sellers seek higher premiums to mitigate the risk of abrupt price fluctuations. The report indicated that this increased cost reflects a cautious market sentiment, preparing for significant price movements in the weeks ahead.

Options activity reinforces this sentiment. In the past month, call options set to expire in December with an $80,000 strike price have garnered considerable interest, suggesting that market participants are positioning themselves for possible price increases by year-end.

Q4 strength showing signs

Despite recent downturns, Bitcoin is displaying signs of potential strength in the fourth quarter, a historically bullish period, especially in halving years. BTC is currently up over 30% from its September lows, achieving a record-breaking 7.29% gain last month, contrasting sharply with typical September challenges.

While pre-election anxieties may dampen October’s close, historical fourth-quarter gains, averaging 31.34%, remain a promising indicator of bullish momentum. Bitcoin has not recorded a bearish fourth quarter in any halving year.

Additionally, the “Trump trade” effect significantly influences Bitcoin’s current performance, with macroeconomic factors and increasing betting odds favoring Trump’s re-election contributing to market uncertainty.

The report referenced recent data from RealClearPolitics and Polymarket, which estimate Trump’s probability of victory at approximately 59% and 64.9%, respectively, intensifying an already volatile market.

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