According to the latest “Bitfinex Alpha,” Bitcoin (BTC) is in for a turbulent few weeks as election uncertainty, the “Trump trade” narrative and historically favorable conditions will create a “perfect storm” for market action in the fourth quarter. report.

The report said Bitcoin had already shown “whiplash” price action in the run-up to the US election, with BTC suffering a 6% correction last week after approaching $70,000.

As the election date approaches, Bitfinex analysts expect volatility to intensify, especially given the widespread view that a Republican victory could boost markets, while a Democratic victory brings more unclear implications.

Options markets are also affected

Options premiums and expected daily volatility for the US stock market and Bitcoin are expected to rise as election results are expected on November 6th and 8th.

The report added that Bitcoin could face even higher volatility as traders weigh possible market shifts related to the election outcome, particularly if former US President Donald Trump is re-elected to office due to his vocally supportive stance towards cryptocurrencies.

Additionally, the implied volatility (IV) curve reflects increased expectation, with Bitcoin's November 8 strike prices suggesting IV values ​​above 100 for options with strike prices above $100,000.

A high IV typically drives up option prices as sellers demand higher premiums to offset the risk of large price movements. The report suggested that these increased costs reflect a cautious mood in the market as it prepares for significant price fluctuations in the coming weeks.

Options activity supports this sentiment. Last month, call options expiring in December with a strike price of $80,000 attracted a lot of interest, suggesting that market participants are bracing for possible price increases by the end of the year.

Q4 strength shows signs

Despite recent corrections, Bitcoin is showing signs of its potential strength in the fourth quarter, a historically bullish quarter, especially in the halving years. BTC is currently up more than 30% from September lows, marking a record-breaking 7.29% gain over the last month, a stark contrast to typical September challenges.

Although pre-election jitters may dampen October's closing price, historic fourth-quarter gains of 31.34% on average remain a hopeful indicator of upward momentum. Bitcoin has never had a declining fourth quarter in any halving year.

Additionally, the “Trump trade” effect is playing a significant role in Bitcoin’s current performance as macroeconomic factors and rising betting odds favor Trump’s re-election and increase market uncertainty.

The report cited recent data from RealClearPolitics and Polymarket that put Trump's probability of victory at about 59% and 64.9%, respectively, fueling an already volatile market.

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