Bitfinex Alpha | Disruption is coming

October 29 Bitfinex Alpha | Disruption is coming

Bitcoin is making waves due to an explosive combination of geopolitical instability, macroeconomic factors, and the increasingly heated “Trump Trade” narrative. Last week, BTC suffered a shocking correction of 6.2% before recovering. This shows the growing influence of the upcoming US presidential election on prices, with a Republican victory seen as a boost for risky assets such as Bitcoin. The correlation between Trump’s chances of being elected and Bitcoin’s rise is becoming increasingly clear.

The anticipation surrounding the election has caused an “explosion” in options activity. Options expiring on key dates around the election are commanding higher premiums, and implied volatility is expected to peak at 100V daily on November 8, shortly after Election Day. This shows that the market is bracing for potential volatility. Regardless of the election outcome, we expect near-term volatility to be higher than usual, but we are confident that there is upside in the long-term.

Despite the recent correction, Bitcoin has shown remarkable resilience since falling to $52,756 in September, growing 30% throughout October. Seasonal trends are also favoring Bitcoin. The fourth quarter always produces quarterly returns during the half year, with an average quarterly return of 31.34%. This strong seasonality effect, combined with record open interest for Bitcoin futures and options, highlights the optimism of market participants heading into the end of the year.

Supporting this optimism is the steady increase in call options for the December 27 expiration date, particularly focused on the $80,000 price level. With open options trading volume climbing to new highs, the market is showing signs of positioning itself for a post-election rally that could potentially push Bitcoin to an all-time high of $73,666.

In short, election uncertainty, the “Trump trade” saga and favorable Q4 seasonality create a perfect storm for Bitcoin, promising an interesting period ahead regardless of the noisy price movements when the election takes place in two weeks.

Across the U.S. economy, labor markets have proven resilient despite recent natural and industrial disruptions. Initial jobless claims fell to 227,000 last week despite the challenges of Hurricane Milton and a prolonged strike at aircraft manufacturer Boeing. Importantly, Florida’s hurricane-related layoffs were offset by declines in unemployment claims in other states, highlighting the strong labor environment outside of the affected regions. The Federal Reserve’s Beige Book also described employment as ‘stable’ and reported minimal layoffs across a variety of sectors.

In the housing sector, the US market is currently experiencing differentiation. New home sales surged in September due to temporary mortgage rate cuts. Meanwhile, sales of existing homes plummeted to their lowest level since 2010 due to the “lock-in effect,” in which homeowners with low interest rates are reluctant to sell their homes and receive higher interest rates when purchasing new homes. Affordability remains a major barrier for many first home buyers as prices continue to remain high. Recent interest rate cuts have boosted new home sales, but a sustained recovery in the housing market will depend on a broad stabilization of mortgage rates or potential intervention by the Federal Reserve.

Emory University’s recent investments in digital assets represent a shift toward institutional adoption of cryptocurrencies. The university disclosed its holdings in the Grayscale Bitcoin Mini Trust and Coinbase stock (totaling approximately $15.9 million), signaling the growing acceptance of digital assets at traditional institutions.

Microsoft plans to vote on a proposal to use Bitcoin as a financial asset at its upcoming shareholder meeting. The board opposed the proposal, citing volatility and regulatory concerns, but even a small amount of Microsoft’s $76 billion in cash reserves would go a long way toward legitimizing BTC as a corporate asset.

This is the analysis of Bitfinex Alpha 128. Happy trading!

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