(MENAFN- Investor Ideas) Investorideas, a go-to platform for big investing ideas releases market commentary from Samer Hasn, Senior Market Analyst at XS.
Bitcoin is up more than 1% after correcting above $73,000 last week and falling below $67,000 yesterday, while it is trying to consolidate above $68,000 today.
Bitcoin's moves come amid anticipation of the US presidential election that is starting today, which is seen as a turning point in the history of the industry, especially if Republican candidate Donald trump wins.
At the same time, neither candidate appears to be in a clear lead in the polls, which could leave cryptocurrencies vulnerable to violent volatility this week. Kamala Harris is slightly ahead of Trump in the poll average by 1.2% after this gap narrowed to 0.9% on Monday, indicating a very close race in the polls.
This closeness has made bullish bets on Bitcoin riskier, especially with the relatively high levels. This is what may have prompted investors to massively exit Bitcoin spot exchange-traded funds, which recorded the second-largest outflows in history with over $540 million yesterday alone, according to SoSo Value.
Futures long positions have also suffered from massive liquidations over the past two days of over $300 million as the crypto's bullish momentum has failed to hold, with Bitcoin accounting for nearly 100 million of those liquidations, according to CoinGlass. Meanwhile, futures open positions have shrunk from a record high of over $43.6 billion in late October to just below $40 billion yesterday.
However, we are still seeing bullish bets on a Trump win targeting higher-than-historic levels for Bitcoin in the options market.
According to Deribit, next Friday is the expiration date for options contracts with a notional value of over $3.1 billion. It is worth noting that the put/call ratio is 0.59, while the nominal value of call options is more than $1.97 billion, and more than 78% of this amount for options whose execution price exceeds current prices, or out of the money, meaning that they are worthless given current prices.
Moreover, approximately $680 million worth of those call options target Bitcoin prices ranging between $74,000 and $80,000, in reference to bets on a Trump victory - or signs that confirm it after the end of the vote today - which is expected to push prices to record levels in the near future. However, the date of announcing the results is not known and counting the votes may take days.
Markets may also hope to hear a soft tone from Federal Reserve Chairman Jerome Powell after announcing the interest rate decision on Thursday, which will help fuel risk appetite, which in turn requires more optimism about continuing to reduce rates. Meanwhile, markets almost certainly expect a 25-basis point cut at this week's meeting, according to CME FedWatch Tool figures.
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