US Elections 2024: Brace for Impact

Examining implied volatilities for Bitcoin (BTC) and Ethereum (ETH) options reveals a significant jump around the U.S. election date, an occurrence that’s not unexpected given the usual surge in overall volatility during such events. It’s intriguing to note that the BTC Put/Call Skew shows optimism across various maturities. Even options with expirations beyond the election dates (more than 3 months) are displaying a call premium over puts, which is somewhat unexpected given the uncertainty surrounding the presidential race. This could suggest that the market remains hopeful about the election outcome, regardless of who eventually wins.

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Before President Biden withdrew from the race in July, it appeared that Trump was the preferred candidate within the cryptocurrency community. Following the unsuccessful assassination attempt on July 12th, bitcoin‘s value skyrocketed from $56,000 to $65,000, fueled by speculation that the former president would gain from the incident. Over the years, Trump’s stance on cryptocurrencies has evolved. As president, he expressed doubts about cryptocurrencies, suggesting they could be used for illicit activities like drug trafficking. He even went as far as to describe bitcoin as a competitor to the U.S. dollar. However, in recent times, Trump has wholeheartedly endorsed cryptocurrencies, pledging to make the U.S. a leading player in the field and the world’s foremost “bitcoin superpower” and “crypto capital.” His campaign now accepts bitcoin donations, and he has hinted at replacing SEC Commission Chair Gary Gensler, who is often disliked by crypto enthusiasts. This change of heart seems to have been effective; it appears that the majority of the cryptocurrency community is supporting Trump.

Trump isn’t the only one finding appeal among the expanding crypto voter base. Although the Biden administration has adopted a tough stance on cryptocurrency regulations, Vice President Harris has shown a more favorable outlook towards the technology, dismissing claims that she intends to clamp down on the sector. This positive stance from Harris is notable as various special interest groups advocate for crypto. By August, the crypto industry had donated an unprecedented $119 million, according to data by Public Citizen, a non-profit organization. The report reveals that crypto companies contributed around 44% of all corporate funds in this year’s elections.

Instead of asking which candidate is better for cryptocurrency, it might be more insightful to consider if it even matters in the grand scheme. While there’s a widespread belief that a Trump presidency could be more favorable to the industry, the options market presents a somewhat hopeful yet cautious view, given the election’s uncertain outcome. With around 40% of U.S. adults owning crypto, it appears that both candidates can no longer disregard the growing need for fair regulation any longer. However, whether these candidates will follow through on their promises remains to be seen. The industry’s growth and increasing public discourse demonstrate how cryptocurrency has evolved from a fringe libertarian interest into a formidable force with substantial lobbying power and influence over time.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.