Bitcoin (BTC) Volatility Jumps to 3-Month High Ahead of U.S. Election

Investors in crypto and traditional markets bet that impending U.S. presidential election will breed price volatility.

A gauge of bitcoin (BTC) price volatility hit a three-month high on Sunday amid indications from betting markets of a tightly contested U.S. presidential race in crucial swing states.

An options-based measure of expected price swings in bitcoin (BTC) has hit a three-month high amid indications from betting markets of a tightly contested U.S. presidential race in crucial swing states.

Bitcoin (BTC) seven-day implied volatility (7-day IV) hit an annualized 74.4% on Sunday, according to charting platform TradingView.

The seven-day realized or historical volatility was 41.4% at press time. Implied volatility is a gauge of traders’ expectations for price movement over a specified period.

That indicates “a significant risk premium around the elections,” Singapore-based crypto trading firm QCP Capital said in a Telegram broadcast.

Early Sunday, the probability of pro-crypto Republican candidate Donald Trump winning the critical swing state of Pennsylvania weakened sharply to 53% from 61% on the decentralized predictions platform Polymarket.

Meanwhile, the New York Times/Siena poll of likely voters released early Sunday showed Trump and Harris tied at 48%, with Harris leading by two points in a Marist survey that includes undecided voters. In U.S. politics, a swing state is any state a Democrat or Republican candidate could reasonably take. The presidential election is due on Nov. 5, with results to be announced on Nov. 8.

BTC almost hit record highs early this week, rising to $73,500 Tuesday as betting platforms pointed to a comfortable Trump lead. Since then, however, Trump's odds and BTC's price have retreated, with the latter falling below $68,000 early today.

Vol spike in legacy markets

Options-based metrics, measuring expected price turbulence over four weeks, have also jumped in foreign exchange and U.S. Treasury markets.

The Ice BofA Move index, a measure of 30-day implied volatility in Treasury notes, jumped to 135% Friday, the highest since October 2023.

Increased volatility in the U.S. Treasury notes, which play a significant role in global leveraged financing, causes liquidity tightening and often leads to traders trimming their exposure to risk assets such as cryptocurrencies.

Elsewhere, the one-week implied volatility in EUR/USD, the most liquid pair in the currency markets, rose to its highest since the mini-U.S. banking crisis of March 2023.