- Major funds expected wild price swings but were optimistic about BTC’s potential.
- However, analysts anticipated that BTC would fall lower before a possible recovery.
The outcome of the US elections is expected this week, as is the market positioning of hedge funds Bitcoin [BTC] remains demonstrably bullish despite general caution.
Last week, BTC teased an all-time high (ATH) after surging above $73,000 on strong demand for BTC ETFs and increasing chances of Trump winning.
Things were different during election week. As of November 3, Kamala Harris had approached Trump’s odds on Polymarket and was close to 50/50 on Kalshi, another prediction site. In short, it was a close race and any candidate could win.
Source: Kalshi
Major funds are looking at $70,000-$85,000 for BTC
Despite the tight race, hedge funds were overwhelmingly optimistic, but both sides of the market were hedged as a precaution.
According to the latest data from Deribit, the options market saw massive call buying (bets on price rises) in November for targets between $70,000 and $85,000. Part of the company update read,
“Overwhelming option purchases in the run-up to the elections. Large fund purchase reflects (covers?) CME 70+80+85k Nov Call purchase with 74-85k Nov Calls + 70k Nov Straddles.”
Furthermore, the huge bids on straddles (huge price swings) indicate the expected wild volatility around Election Day. Large funds bought both call options (upside protection) and puts (downside protection) to absorb potential price swings in either direction.
Delay likely to result in election results?
Perhaps the most important part of the Deribit data, however, was that traders shifted their focus from option expirations on November 8 to November 29. This indicated an expected prolonged delay in election results, likely due to controversies or manipulation claims.
“November 8 still has the bump, but larger flows on November 29, perhaps due to less theta decay in a long-term outcome, have dominated the past week.”
This cautious attitude in the short term may have led to the recent derisking on the spot market at the end of last week.
BTC fell from last week’s high of $73.6K to below $68K, and some analysts expected it to fall even lower, citing historical patterns around Election Day.
One of the analysts, Eugene Ng Ah Sio, a crypto trader, said,
“Seeing constructive risk reduction happen at exactly the right time. The plot thickens…’
Eugene added that he would avoid the markets until the election results are known.
The cautious approach was echoed by crypto trading firm QCP Capital, warning that the election outcome could be a sell-the-news event. It said:
“Regardless of the outcome, we believe the election will be another sell-the-news move that will replicate the Bitcoin conference in Nashville.”
Another market observer and investor, Mike Alfred, shared a similar sentiment, but pointed out that this could be the last week to buy BTC under $70,000.
“Every previous cycle, Bitcoin has made a low price the week of the US election that has NEVER been revisited… This week will be the last time you can ever buy Bitcoin under $70,000.”
Source: BTCUSDT, TradingView
On the price charts, $65,000 remained a key level (confluence area) should the pullback be lower.
However, the positioning of major funds was a telltale sign of possible recovery for BTC despite the uncertainty surrounding the election outcome.