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Bitcoin’s volatility has hit a quiet period as traders await the outcome of the US election. Bitfinex analysts describe it as a “calm before the storm,” with lower volatility signaling market caution and potential for significant price action once results come in.
US Election Brings a Pause in Bitcoin’s Volatility
As Bitcoin traders eagerly await the results of the US election, volatility—a measure of predicted price fluctuation—seems to have come to a standstill. Speculators at Bitfinex have speculated that this is merely the "calm before the storm."
A market analysis titled "Calm Before the Storm?" was released on November 5th. Bitcoin options' implied volatility is presently in the low 40s, according to Bitfinex analysts, which indicates that market participants are not very confident in big price changes.
According to statistics from crypto derivatives exchange Deribit, Bitcoin's volatility index, which measures BTC's forward-looking volatility, reached a fresh three-month high of 65.7 on Nov. 3. However, as of writing, it has subsequently fallen to 63.2.
Traders Scale Back Positions Ahead of Election Day
According to CoinGlass data, Bitcoin's open interest also dropped significantly as traders dumped a lot of short and long bets on the asset before the election.
According to Bitfinex experts, "Despite a general expectation for heightened volatility leading up to the day of the US elections on 5th November, many market participants seem hesitant to take action, adopting a wait-and-see approach.”
Still, the research predicted a huge increase in volatility just after the election, which would "fuel big moves" or, failing that, signal a "much deeper correction for Bitcoin on the lower timeframes."
Per Cointelegraph, the results are consistent with what other market analysts have predicted, which is an increase in volatility. After the election is called, one trader predicted that Bitcoin's price will fluctuate by "at least" 10%.
Bitcoin Dominance Leaves Altcoins in the Shadows
Noting a significant amount of "apathy" in altcoin markets, Bitfinex analysts pointed out that the market is entirely focused on Bitcoin as we approach the election, with Bitcoin dominance reaching a "new cycle high" of over 60% on Oct. 29.
Reporter notes that "Altcoins are now seeing severe drawdowns whenever BTC pullbacks"; ETH is now 40% lower than its initial ETF rise, while Solana and Ether have both declined about 12% from their recent highs.
Muted Speculation and Uncertain Prospects for Altcoins
"The speculative interest that once supported altcoins seems to have vanished, reflected in stable funding rates and muted overall market sentiment," stated Bitfinex. “With BTC absorbing most of the capital flow into crypto assets, altcoins are struggling to keep up, and without a fresh catalyst, their prospects for a comeback in the near term appear slim."
“Bitcoin’s overall resilience since its September low is noteworthy. In a nutshell, the current market dynamics point to an electrifying week ahead.”
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