Bitcoin Traders Wary of Price Drop in U.S. Election Week, CME Options Show

2 months ago |   readers | 3 mins reading
Bitcoin Traders Wary of Price Drop in U.S. Election Week, CME Options Show

Election 2024 coverage presented by
Bitcoin (BTC) traders are seeking protection against price weakness amid projections of a U.S. election-induced volatility boom.
That’s according to CME’s bitcoin options market, where put options, offering protection against price drops and expiring within a week, were pricier relative to calls on Monday, according to data source CF Benchmarks and QuickStrike.
The so-called 25-delta risk reversal for contracts expiring Friday (P2XE24) was -1.3% on Monday, showing a bias for puts. The metric measures the difference in implied volatility between out-of-the-money higher strike calls and lower strike OTM puts, providing an easy to read picture of the market sentiment.
A call option gives the purchaser the right but not the obligation to buy the underlying asset at a predetermined price at a later date. A put options gives the right to sell.
“It looks like bitcoin options traders appear to be hedging their bets to the downside ahead of the U.S. election this week. Through a .25 delta risk reversal we can see that contracts expiring within a week are slightly negative – meaning puts more expensive than calls – compared to longer-dated maturities of either 2 weeks or 30 days, where the skew reverts to being positive again,” researchers at CF Benchmarks told CoinDesk in an email.
Bitcoin’s price has pulled back to $68,000 from near record highs above $73,500 in one week, alongside a drop in the more pro-crypto Donald Trump’s chances of election victory.
The pricing for longer-duration options was positively skewed in favor of calls, indicating a broader constructive outlook, consistent with the consensus analysts’ expectations for a year-end rally to $80,000 and higher.
The latest polls show that Democrat Kamala Harris and her rival Republican candidate Donald Trump, perceived as crypto-friendly, are running neck and neck in most swing states, including Pennsylvania and nationally.
Per some observers, the 50-50 odds mean the eventual outcome, expected Friday, could lead to a BTC price swing of $6,000-$8,000.
Options trading on the leading exchange Deribit also show a broader bullish outlook with a largely neutral bias for this week, according to data source Amberdata.
The 25-delta risk reversals show barely a difference between pricing for calls and puts expiring this week. The sentiment is decisively bullish from the Nov. 15 expiry and beyond.
Edited by Parikshit Mishra.
Disclosure
Please note that our privacy policy, terms of use, cookies, and do not sell my personal information have been updated.CoinDesk is an award-winning media outlet that covers the cryptocurrency industry. Its journalists abide by a strict set of editorial policies. CoinDesk has adopted a set of principles aimed at ensuring the integrity, editorial independence and freedom from bias of its publications. CoinDesk is part of the Bullish group, which owns and invests in digital asset businesses and digital assets. CoinDesk employees, including journalists, may receive Bullish group equity-based compensation. Bullish was incubated by technology investor Block.one.
Omkar Godbole is a Co-Managing Editor on CoinDesk’s Markets team.

This article is originated from the source

CoinDesk
Read Full Article
Published on Other News Site
cointelegraph Badgebitcoin Badgedecrypt Badgecryptonews Badgeu Badgebeincrypto Badgeblockworks Badgecoincodex Badge