Cryptocurrency Market Experiences Severe Volatility

Tomorrow (November 5), the official electoral voting for the 2024 U.S. presidential election is set to take place, increasing uncertainty in the election and exacerbating volatility in the cryptocurrency market. Changes in the political environment often trigger fluctuations in Bitcoin prices, and investor sentiment is generally influenced by expectations of policy adjustments, affecting enthusiasm for the Bitcoin market.

Image source: Internet

According to data, in the past 24 hours, 145,000 people in the crypto space were liquidated, with a liquidation amount reaching $363 million. This liquidation has resulted in significant losses for long positions, accounting for about 72%, amounting to $264 million; however, short positions also faced severe losses, with losses nearing $100 million.

This reflects that the instability in the market has not completely insulated short investors. Short investors typically profit during market downturns, but in such a volatile market, risks are continuously amplified.

Bitcoin Implied Volatility Hits Three-Month High

Historically, U.S. elections tend to lead to increased uncertainty in financial markets, especially when the election is closely contested. Tomorrow (November 5) marks the official voting day for electors in various states, and Bitcoin's volatility has significantly increased.

Bitcoin's implied volatility has reached its highest level in the past three months. The Deribit Bitcoin Implied Volatility Index (DVOL) shows that its 30-day expected price volatility has risen to an annualized 63.24%. Additionally, the seven-day implied volatility surged to an annualized 74.4%, far exceeding the historical volatility of 41.4%. This indicates that the market is pricing in a significant risk premium due to the uncertainty surrounding the election.

The high implied volatility of Bitcoin options suggests that market participants are very sensitive to the election results and are leaning towards bullish options. Many traders are positioning themselves in the options market, anticipating significant price fluctuations in Bitcoin after the election. Some institutional investors are betting on a rise in Bitcoin prices through options, with expectations that it could reach $80,000 or higher after the election. Meanwhile, trading volume for CME Bitcoin options has surged, indicating an optimistic outlook on future price volatility.

This sentiment somewhat reflects the market's anticipation of potentially favorable policy news for the cryptocurrency market stemming from the election results.

From a technical perspective, Bitcoin is hovering near a critical price level.

In the short term, technical indicators such as the Bollinger Bands and MACD show possible signs of a price rebound, but caution is warranted regarding overbought risks. The MACD histogram on the 4-hour cycle remains negative and is gradually shortening, with the DIF and DEA approaching the zero axis, suggesting a potential rebound or sideways consolidation. The price is currently fluctuating near EMA7 (68,849.97), slightly below EMA30 (69,415.63), and well above EMA120 (68,160.53), indicating significant short-term moving average pressure, while the medium to long-term trend remains upward.

Image source: AICoin

For specific details on BTC, you can download the AICoin app at https://www.aicoin.com/download

Summary

As the election approaches, investors are both looking forward to market gains from favorable policies and are concerned about potential market turmoil triggered by the election results. Any slight policy change could become a catalyst for market upheaval. The shifting dynamics of the market reflect a complex interplay of investor expectations and fears about the future. This sentiment not only influences their investment decisions but also, to some extent, foreshadows the market's direction. As voting day nears, how the cryptocurrency market will unfold this drama remains to be seen.

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