A new analysis from Bybit and BlockScholes reveals the impact of the upcoming U.S. presidential election on the volatility and trading activity in the crypto derivatives market.
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| Bybit and BlockScholes' report provides insights into the changing dynamics of the crypto derivatives market, focusing on the influence of the U.S. presidential election. Symbolic image |
Dubai, UAE, August 23, 2024:
Bybit, a prominent cryptocurrency exchange, in collaboration with BlockScholes, has released a comprehensive Crypto Derivatives Analytics Report. This week's report delves into the intricate relationship between the upcoming U.S. presidential election and the dynamic world of crypto derivatives.
The report sheds light on the current state of the BTC and ETH futures markets, revealing a noticeable decline in trading activity. This subdued trading environment is primarily attributed to the low realized volatility in spot prices. Both BTC and ETH have witnessed reduced trade volumes, with open interest levels remaining below recent highs following a previous sell-off. Additionally, the report identifies a recurring pattern of lower trade volumes on Sundays, which is disrupted only during periods of extreme market volatility, suggesting an underlying seasonality in trading behavior.
While ETH has exhibited a more bearish sentiment compared to BTC, as evidenced by negative funding rates and a strong skew toward out-of-the-money (OTM) puts for short-dated expirations, the options market presents a fascinating development. The report highlights a growing premium being priced in for the U.S. presidential election. This is particularly evident in the stronger skew toward OTM calls for BTC and ETH options expiring after the election. This suggests that traders are increasingly bullish, anticipating potential market-moving events that could arise from the election results.
Furthermore, the volatility term structures have reverted to a steep shape, indicating a higher perceived risk associated with longer-dated tenors. This suggests that the market is beginning to factor in a potential event risk related to the upcoming election. Interestingly, this election premium stands out, as similar event risks are not being priced in for other significant events such as the Jackson Hole Symposium or the FOMC meeting.
Bybit, renowned as the world's second-largest cryptocurrency exchange by trading volume, continues to provide valuable insights into the crypto derivatives market through its partnership with BlockScholes. This latest report offers invaluable information for traders and investors seeking to navigate the complex landscape of crypto derivatives. By understanding the impact of major events like the U.S. presidential election on the crypto derivatives market, investors can make more informed decisions and potentially capitalize on emerging opportunities.