Bitcoin volatility, a measurement of expected price fluctuation, has seemingly stalled as traders await the outcome of the United States election. Analysts from Bitfinex say this could just be the “calm before the storm.”
In a Nov. 5 market report titled “Calm Before the Storm?” Bitfinex analysts shared that implied volatility for Bitcoin (BTC) options is currently trading in the low 40s, suggesting a lack of market confidence in significant price movements.
Bitcoin’s volatility index — a score of BTC’s forward-looking volatility provided by crypto derivatives exchange Deribit — notched a new three-month high of 65.7 on Nov. 3 but has since stumbled to 63.2 at the time of publication, according to data from Derebit.
CoinGlass data showed that Bitcoin’s open interest had also plummeted, with traders closing out large volumes of both short and long positions on the asset in the lead-up to the election.
Source: CoinGlass
“Despite a general expectation for heightened volatility leading up to the day of the US elections on 5th November, many market participants seem hesitant to take action, adopting a wait-and-see approach,” said Bitfinex analysts.
However, the report said a massive spike in volatility is still expected in the immediate aftermath of the election, which could either “fuel big moves” or, if it fails to materialize, could be a warning sign of a “much deeper correction for Bitcoin on the lower timeframes.”
The report falls in line with broader expectations of heightened volatility from several other market pundits. One trader shared that he expects the price of Bitcoin to swing “at least” 10% in either direction after the election is called.
Market signals “apathy” for altcoins
With Bitcoin dominance reaching a “new cycle high” of over 60% on Oct. 29, Bitfinex analysts noted that the market is focused solely on Bitcoin heading into the election, citing a strong dose of “apathy” in altcoin markets.
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Bitcoin dominance has reached a new cycle high of over 60%. Source: TradingView
“Altcoins are now seeing severe drawdowns whenever BTC pullbacks,” wrote the report, noting that Ether (ETH) and Solana (SOL) have both fallen roughly 12% from their recent highs, while ETH is now 40% down from its initial ETF rally.
“The speculative interest that once supported altcoins seems to have vanished, reflected in stable funding rates and muted overall market sentiment,” said Bitfinex. “With BTC absorbing most of the capital flow into crypto assets, altcoins are struggling to keep up, and without a fresh catalyst, their prospects for a comeback in the near term appear slim.
“Bitcoin’s overall resilience since its September low is noteworthy. In a nutshell, the current market dynamics point to an electrifying week ahead.”
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