Ethereum’s Volatility Outpaces Bitcoin as US Election Nears

In the cryptocurrency markets, Ethereum’s volatility readings are currently surpassing those of Bitcoin. With a notable gap that has widened over the last few months. This increase comes as traders prepare for potential market shifts ahead of the upcoming US presidential election in November.

Growing Volatility in Ethereum

Nick Forster, the founder of DeFi derivatives protocol Derive. Highlighted that the implied volatility for 30-day at-the-money Ethereum contracts relative to Bitcoin has expanded to almost 7%. “At-the-money” refers to an options contract. Whose strike price is very close to the current market price of the underlying asset.

While both Bitcoin and Ethereum exhibited nearly identical volatility levels at the start of November last year. The situation has changed dramatically as the election approaches. “Ethereum’s heightened volatility is a direct reflection of traders’ expectations for increased uncertainty. Especially as we approach the election,” Forster explained.

Anticipated Movements in Crypto Markets

According to Forster, notable spikes in forward volatility can be observed between October 25 and November 8. With Ethereum’s forward volatility at 76.6% compared to Bitcoin’s at 69.8%. This indicates that traders are bracing for significant movements in these periods. With Ethereum appearing more sensitive to external events such as the impending election.

Seasonal Trends and Political Influence

A spokesperson for digital assets market data outfit CryptoQuant noted that Bitcoin is entering a period of historically positive performance, often recording gains in the fourth quarter during bull cycles. “With recovering demand and favorable seasonality, Bitcoin could target $85,000 to $100,000 in Q4,” they told Decrypt.

The election also plays a critical role, as both Vice President Kamala Harris and former President Donald Trump have engaged with the crypto community, aiming to sway industry participants. Trump is perceived by many in the crypto sector as more favorable towards creating policies that provide clarity for those operating within the industry. Meanwhile, Harris has begun to speak publicly on the matter, though her policy directions remain somewhat unclear.

Market Sentiment and Outlook

“Traders seem more confident in Bitcoin’s ability to weather these macro events,” Forster commented, reflecting a mildly bullish sentiment beginning to emerge for Bitcoin. This sentiment contrasts with the more volatile expectations surrounding Ethereum, which is more directly affected by regulatory discussions relevant to its extensive use in DeFi platforms.

As the US election looms, the cryptocurrency market is showing signs of significant volatility, with Ethereum notably outpacing Bitcoin in this regard. Traders are advised to keep a close watch on developments, as the political climate continues to influence market dynamics and investor sentiment.