Nov. 5, 2024

CoinDesk 20 Index: 1,997.20  -0.53%
Bitcoin (BTC): $68,771.50  +0.04%
Ether (ETH): $2,437.68  -1.34% 
S&P 500: 5,712.69  -0.28%
Gold: $2,741.94  +0.16%
Nikkei 225: 38,474.90  +1.11%

Bitcoin is little changed, having recovered from a dip below $68,000. Aside from today's U.S. presidential election, which has traders seeking clues for the next market move, BTC has also been threatened by activity by Mt. Gox. The defunct crypto exchange transferred over 32,000 BTC ($2.2 billion) to unmarked wallet addresses, often a sign of an impending transfer to exchanges, thereby applying selling pressure to BTC. Bitcoin traded at just under $68,800 late in the European morning, little changed in the last 24 hours. The broader digital asset market, as measured by the CoinDesk 20 Index, has fallen just over 0.5%.

DOGE is the only major token in the green, having gained nearly 10% in the last 24 hours. The memecoin has risen over 40% in the past month thanks to the renewed endorsement by technology entrepreneur Elon Musk as part of the Republican campaign. Musk has been proposing a Department of Government Efficiency — which is abbreviated as D.O.G.E, a clear nod to the token — as an agency that will make government spending and monetary planning more effective. Observers will expect further gains should Donald Trump emerge victorious, but many analysts are predicting a marketwide surge following the election regardless of who wins.

BTC traders are hedging against potential downside in the aftermath of the election, scooping up put options expiring within the week. 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 option gives the right to sell. Through a 0.25 delta risk reversal we can see that contracts expiring within a week are slightly negative — meaning puts are 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. The pricing for longer-duration options was positively skewed in favor of calls, indicating a broader constructive outlook.

Markets are predicting wild swings in prices as the election plays out, such that 10x Research is suggesting a pair trade of BTC and SOL as a tactical bet to navigate the turbulence.

"A tactical trade heading into the election could involve going long bitcoin and short solana," Markus Thielen, 10x Research's founder, said in a note to clients on Monday.

Thielen explained that the election's outcome would have far-reaching implications for digital assets, including potential approval of a U.S.-based exchange-traded fund (ETF) tied to alternative cryptocurrencies, such as SOL.

"If Harris wins, the likelihood of these ETFs getting approved may decrease, potentially leading to a 15% drop in solana, while bitcoin might experience a more limited decline of around 9%," Thielen said, adding that a Trump victory could see SOL, BTC and ether rise by around 5%.

BTC and ETH might see bigger gains than SOL if Trump wins because spot ETFs tied to bitcoin and ether are already trading in the U.S. and have amassed billions of dollars in investor money this year. The availability of an alternative investment vehicle might translate into bigger gains in anticipation of favorable regulatory policy under a Trump presidency.

- Omkar Godbole