Cryptocurrency
Bitcoin Traders Say Options Market Understates Likelihood of Chaotic US Election
CoinDesk reports,”The November U.S. presidential election could be contentious, yet the bitcoin market is pricing little event risk. Analysts, however, warn against reading too much into the complacency suggested by the volatility metrics. “Bitcoin’s three-month implied volatility, which captures the Nov. 3 election, fell to a two-month low of 60% (in annualized terms) over the […]
CoinDesk reports,”The November U.S. presidential election could be contentious, yet the bitcoin market is pricing little event risk. Analysts, however, warn against reading too much into the complacency suggested by the volatility metrics.
“Bitcoin’s three-month implied volatility, which captures the Nov. 3 election, fell to a two-month low of 60% (in annualized terms) over the weekend, having peaked at 80% in August, according to data source Skew. Implied volatility indicates the market’s expectation of how volatile an asset will be over a specific period.
“The one- and six-month implied volatility metrics have also come off sharply over the past few weeks.
“The declining price volatility expectations in the bitcoin market cut against growing fears in traditional markets that the U.S. election’s outcome may not be decided for weeks. Traditional markets are pricing a pickup in the S&P 500 volatility on election day and expect it to remain elevated in the event’s aftermath.
“’Implied volatility jumps around election day, pricing an S&P 500 move of nearly 3%, and the term structure remains elevated well into early 2021,’ analysts at investment banking giant Goldman Sachs recently said.
“One possible reason for the decline in bitcoin’s volatility expectations ahead of the U.S. elections could be the leading cryptocurrency’s status as a global asset, said Richard Rosenblum, head of trading at GSR. That makes it less sensitive to country-specific events…”