As the 2024 US presidential election approaches, anxiety reaches its peak in the stock, treasury bond, and cryptocurrency markets. The markets brace for one of the most contested elections in recent years. Prior to the election, long positions known as the “Trump trade” (increasing yields in the dollar, cryptocurrencies, and treasury bonds) have gained momentum with Trump leading in predictive markets. According to QCP Capital, a potential victory for Harris could reverse these gains, triggering significant market movements overnight.
Bitcoin Expects 3.5% Movement, But Risks May Be Higher
The cryptocurrency market anticipates a +/- 3.5% movement in Bitcoin 
$77,420’s (BTC) spot price on election night. However, the market may not have fully priced in the post-election risks. The volatility premium beyond the November 8 futures contracts indicates that the markets expect a quick resolution, potentially overlooking delays or contentious results.
High volatility seems almost certain. Following Trump’s surprising victory in 2016, US futures initially dropped but then recovered. In 2020, Biden’s victory was confirmed four days later, leading to a peak in trading volume over six months.
On the other hand, the results of the US Congress races could be as significant as the presidential outcome. A Republican victory may increase future budget deficits, prompting the Fed to adopt a tighter monetary policy. This could lead to negative consequences for risky assets. Conversely, a divided legislature might create a calmer market environment, potentially reducing volatility.
Interest in BTC Persists in Election Markets
Before the election, balanced interest in both call and put options is observed in the options market. Experts noted a growing demand for upper-end calls and lower-end puts recently. Meanwhile, Bitcoin continues to be viewed as part of the “Trump trade.”
On Monday, spot prices fell significantly due to substantial outflows from spot ETFs. This coincided with polls indicating Harris leading by a narrow margin in Iowa. As polling results begin to emerge tomorrow, Bitcoin’s spot price is expected to experience fluctuations, leaving market reactions on election night still uncertain.
