Bitcoin price falls, forward volatility jumps as traders brace for election: Analyst

Quick Take

  • A rise in volatility means traders have a two-in-three chance of seeing swings of nearly 10% in the price of Bitcoin and Ethereum following Tuesday’s election, according to an analysis by Nick Forster, founder of DeFi options protocol Derive.xyz. 

As former President Donald Trump's odds of victory on prediction markets have slipped following a spate of positive polling results for Democrats, even falling briefly below Vice President Kamala Harris' odds of victory on US-regulated market Kalshi, Bitcoin's price has fallen and volatility has widely increased. 

Forward volatility for BTC and ETH spiked overnight, with Bitcoin's volatility now sitting at 80.30%, up from 72.20%, and Ethereum's at 82.92%, up from 75.40%, according to an analysis from Derive.xyz (formerly Lyra) founder Nick Forster .

"This escalation reflects traders are bracing for the election results, which could sway market prices substantially," Forster wrote. Forster projected a two-in-three likelihood that election night will lead to big swings in price "...ranging between -8.97% and +9.85% for BTC, and slightly wider swings for ETH, from -9.25% to +10.19%."

The price of Bitcoin had fallen from a recent high of about $72,600 on Oct. 31 to a low of about $67,500, a 7% drop, before recovering slightly to its current price of about $68,600 at time of publishing, according to The Block's Bitcoin Price Page

If Bitcoin were to hold steady at this price, Forster's analysis projects a 68% chance of the world's largest cryptocurrency rising as high as $75,400 or as low as $62,500 following the election. What's more, Forster predicted a 5% chance of Bitcoin dropping below $57,000 or rising above $83,000 due to the increased forward volatility. 

"Total call open interest for BTC stands at 1,179 compared to 885 puts, clearly signaling the market’s bullish inclination despite potential volatility," Forster noted. 

Ethereum, which has seen a similar -9.2% drop in price since its value on Oct. 30 to its current value of about $2,450, has a 66% chance of rising as high as $2,700 or falling as low as $2,222, according to Forster's analysis, a slightly wider range than that of Bitcoin. The 5% likelihood case sees the price falling below $2,000 or rising above $2,975. 

A Standard Chartered analyst also recently predicted high volatility in crypto prices surrounding the U.S. Presidential election on Tuesday. 


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About Author

Zack Abrams is a writer and editor based in Brooklyn, New York. Before coming to The Block, he was the Head Writer at Coinage, a Web3 media outlet covering the biggest stories in Web3. The story he co-reported on Do Kwon won a 2022 Best in Business Journalism award from SABEW. Other projects included a deep dive into SBF's defense based on exclusive documents and unveiling the identity of the hacker behind one of 2023's biggest crypto hacks — so far. He can be reached via X @zackdabrams or email, [email protected].