Bitcoin expected to face high volatility as ‘Trump trade’ and Q4 seasonality converge – Bitfinex Bitcoin expected to face high volatility as ‘Trump trade’ and Q4 seasonality converge – Bitfinex
Bitcoin acting as a "Trump trade" and signs of a potential strong fourth quarter suggest high volatility is on the horizon.
2 min read
Updated: Oct. 28, 2024 at 10:53 pm UTC
Cover art/illustration via CryptoSlate. Image includes combined content which may include AI-generated content.
Bitcoin (BTC) is set for turbulent weeks ahead, with election uncertainty, the “Trump trade” narrative, and historically favorable fourth-quarter conditions creating a “perfect storm” for market movement, according to the latest “Bitfinex Alpha” report.
The report said that in the lead-up to the US elections, Bitcoin has already demonstrated “whipsaw” price action following the 6% correction BTC underwent last week after approaching $70,000.
Notably, as the election date approaches, Bitfinex analysts expect volatility to intensify, particularly given the widely held view that a Republican victory may boost markets while a Democratic win presents more ambiguous implications.
Options markets are also affected
Option premiums and anticipated daily volatility for the US stock market and Bitcoin are projected to rise as election results are expected around Nov. 6 and Nov. 8.
The report added that Bitcoin might experience even higher volatility as traders weigh potential market shifts tied to the election outcome, especially if former US president Donald Trump is election to office again due to his vocally supportive stance toward crypto.
Additionally, the implied volatility (IV) curve reflects heightened anticipation, with Bitcoin’s Nov. 8 strike prices suggesting IV levels above 100 for options with strike prices over $100,000.
High IV typically drives up option prices as sellers demand higher premiums to offset the risk of sharp price moves. The report suggested that this elevated cost reflects a cautious sentiment in the market, which is preparing for substantial price swings in the coming weeks.
Options activity supports this sentiment. Over the past month, call options expiring in December with an $80,000 strike price have seen notable interest, hinting that market participants are positioning for potential price surges by year-end.
Q4 strength showing signs
Despite recent corrections, Bitcoin shows signs of its potential strength in the fourth quarter, a historically bullish quarter, particularly in halving years. BTC is currently up over 30% from September lows, marking a record-breaking 7.29% gain last month, a stark contrast to typical September challenges.
Although pre-election jitters may temper October’s close, historical fourth-quarter gains, averaging 31.34%, remain a hopeful indicator of bullish momentum. Bitcoin has not posted a bearish fourth quarter in any halving year.
Additionally, the “Trump trade” effect plays a significant role in Bitcoin’s current performance, with macroeconomic factors and rising betting odds favoring Trump’s re-election feeding market uncertainty.
The report cited recent data from RealClearPolitics and Polymarket, which places Trump’s victory probability at around 59% and 64.9%, respectively, fueling an already volatile market.
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Author 
Gino Matos
Gino Matos is a law school graduate and a seasoned journalist with six years of experience in the crypto industry. His expertise primarily focuses on the Brazilian blockchain ecosystem and developments in decentralized finance (DeFi).
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Bitcoin, a decentralized currency that defies the sway of central banks or administrators, transacts electronically, circumventing intermediaries via a peer-to-peer network.
Bitfinex
Bitfinex is a digital asset trading platform offering state-of-the-art services for digital currency traders and global liquidity providers.
A businessman, politician, and media personality, Donald John Trump served as the 45th president of the United States from 2017 to 2021.