As a seasoned crypto investor with a knapsack full of battle scars from previous market rollercoasters, I find myself bracing for what could be a turbulent week ahead. The current calm before the storm feels eerily reminiscent of a lull before a storm at sea – you can almost hear the distant thunder rumbling in the distance.
As a crypto investor, I’ve noticed that the volatility of Bitcoin, which gauges anticipated price swings, appears to have slowed down as traders wait for the results of the U.S. election. Analysts from Bitfinex suggest this could be the “calm before the storm,” hinting at potential market turbulence following the election outcome.
As a researcher, I delved into the insights provided by Bitfinex analysts in their Nov. 5 market report titled “Calm Before the Storm?”. The key takeaway from their analysis lies in the current trading range for Bitcoin (BTC) options’ implied volatility, which is hovering around the low 40s. This finding indicates a general lack of market certainty regarding substantial price fluctuations.
The Volatility Index of Bitcoin, calculated by Deribit crypto derivatives exchange and indicating Bitcoin’s predicted volatility in the future, reached a three-month peak of 65.7 on November 3rd. However, it has since dropped slightly to 63.2 as of publication, based on data from Deribit.
According to CoinGlass data, there was a significant drop in Bitcoin’s open interest as traders closed numerous short and long positions on the asset prior to the election. This indicates that a large number of trades were liquidated or closed down.
Bitfinex analysts noted that, contrary to the common belief that markets would become more unpredictable before the U.S. elections on November 5th, many market players appear cautious and are instead choosing to observe events unfold rather than take immediate action.
Nevertheless, the report predicts a significant increase in market turbulence directly following the election. This volatility might stimulate substantial price fluctuations, or if it doesn’t occur as anticipated, could indicate a more severe downturn for Bitcoin on shorter trading intervals.
The report aligns with the wider predictions of increased market turbulence, as suggested by various financial experts. A trader stated his belief that the value of Bitcoin could potentially fluctuate by at least 10% in either direction post the election announcement.
Market signals “apathy” for altcoins
As Bitcoin’s dominance surpassed a “record high” of more than 60% on October 29, Bitfinex analysts observed that the market is primarily concentrating on Bitcoin prior to the election. They attribute this narrow focus to a significant level of “disinterest” or “lack of enthusiasm” in altcoin markets at present.
The report noted that when Bitcoin (BTC) experiences a pullback, altcoins like Ether (ETH) and Solana (SOL) are currently experiencing significant drops. For instance, both ETH and SOL have dropped approximately 12% from their peak levels. Moreover, Ethereum (ETH) is now 40% lower than its initial surge following the launch of its ETF.
According to Bitfinex, the enthusiasm that used to drive altcoins seems to have faded away. This is evident in the stable funding rates and the subdued overall feeling within the market. As Bitcoin takes in most of the investment money flowing into cryptocurrencies, altcoins are finding it difficult to compete, and without a new trigger event, their chances of a quick recovery appear limited.
“Bitcoin’s overall resilience since its September low is noteworthy. In a nutshell, the current market dynamics point to an electrifying week ahead.”
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2024-11-05 08:37