Bitcoin’s price fluctuations, often a barometer of the cryptocurrency market’s overall sentiment, have slowed as traders brace for potential impacts from the U.S. election. Analysts at Bitfinex suggest this could indeed be the “calm before the storm.”
In a recent market update titled “Calm Before the Storm?” Bitfinex analysts highlighted that Bitcoin’s implied volatility — a measure reflecting the anticipated range of price movement — remains subdued, trading around the low 40% range. This relatively low volatility level indicates a degree of hesitation among traders who are wary of making big moves in either direction.
Market signals “apathy” for altcoins
Bitcoin’s volatility index, tracked by Deribit, hit a three-month peak of 65.7 on Nov. 3 but has since slid slightly to 63.2. Additionally, data from CoinGlass reveals a noticeable drop in open interest, as traders close both long and short positions leading into the election.
“Although there’s a general expectation for increased volatility around the election on Nov. 5, it appears that many market participants are holding back, opting to wait and see,” noted the analysts from Bitfinex.
Nevertheless, the report points to the potential for a dramatic increase in volatility immediately following the election results, with the possibility for significant price moves. Failure to see such volatility, however, could be a sign of a more substantial correction for Bitcoin in the near term.
This analysis aligns with the views of other market experts who anticipate a potential 10% price swing in either direction depending on election outcomes, with Bitcoin poised for a substantial reaction.
As Bitcoin’s dominance reached a “new cycle high” of over 60% on Oct. 29, Bitfinex’s report noted a stark lack of enthusiasm for altcoins. The report highlighted the correlation between Bitcoin pullbacks and altcoin declines, with Ether and Solana each dropping about 12% from recent highs, and ETH down approximately 40% from its peak ETF rally.
“The speculative interest that once bolstered altcoins appears to have waned, as evidenced by stable funding rates and subdued sentiment,” Bitfinex analysts observed. “With most capital flows funneling into Bitcoin, altcoins are facing a challenging environment, and without new catalysts, their near-term recovery prospects look slim.”
Bitcoin’s sustained strength since hitting a low in September sets the stage for an intense week ahead, with market dynamics suggesting a pivotal moment for cryptocurrency.
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