Bitcoin is on the brink of a turbulent phase as the convergence of the 'Trump trade' narrative and historically strong fourth-quarter seasonality sets the stage for significant market volatility. According to the latest Bitfinex Alpha report, uncertainty surrounding the upcoming US elections and market behaviors are likely to drive Bitcoin's price action.
Elections and Market Dynamics
As the US elections approach, Bitcoin's price has already shown whipsaw movements, including a recent 6% correction after nearing the $70,000 mark. Analysts at Bitfinex anticipate that volatility will intensify, particularly considering the prevailing belief that a Republican win could positively impact the markets, while a Democratic victory may lead to more uncertain outcomes.
Options Markets in Play
The options market is also expected to experience heightened activity. With the election results expected around November 6-8, both option premiums and anticipated daily volatility for Bitcoin are projected to rise. The report indicates that traders are likely to evaluate potential market shifts related to the election outcome, especially if former President Donald Trump is re-elected due to his favorable stance towards cryptocurrencies.
Fourth Quarter Strength
Despite recent corrections, Bitcoin shows signs of strength heading into the fourth quarter, a period that has historically been bullish, particularly during halving years. Currently, Bitcoin is up over 30% since September, marking a record-breaking 7.29% gain last month. Although pre-election jitters may temper October’s performance, historical averages indicate potential 31.34% gains in the fourth quarter, making the outlook seem promising.
The 'Trump Trade' Effect
The 'Trump trade' effect significantly influences Bitcoin's current performance, with macroeconomic factors and betting odds favoring Trump's re-election, further fueling market volatility. Recent data suggests a 59% to 64.9% probability of a Trump victory, intensifying the already volatile market environment.
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