US Elections 2024: Preparing for Potential Market Shifts

The US presidential election is nearing, and cryptocurrency investors are bracing themselves for potential market fluctuations. An examination of implied volatilities for BTC and ETH options reveals a noticeable spike around the election date, which is expected given the anticipated rise in overall volatility. Notably, the BTC Put/Call Skew indicates a sense of optimism across the board, with even longer-dated options showing a call premium over puts, despite the uncertainty surrounding the election outcome. This optimism appears to be unaffected by the winner of the election. You're reading Crypto Long & Short, a weekly newsletter offering insights, news, and analysis for professional investors. Sign up to receive it in your inbox every Wednesday. Source: Deribit, 15.10.2024 Until President Biden withdrew from the race in July, Trump seemed to be the favored candidate within the crypto community. Following the failed assassination attempt on July 12th, bitcoin's price surged from $56,000 to $65,000, driven by expectations that Trump would benefit from the incident. Trump's stance on crypto has evolved over time; as president, he expressed skepticism, citing concerns about illegal activities, and viewed bitcoin as a competitor to the dollar. However, he has since embraced crypto, aiming to make the US a 'bitcoin superpower' and the 'crypto capital of the planet.' His campaign now accepts bitcoin donations, and he has promised to replace SEC Commission Chair Gary Gensler, who is unpopular among crypto proponents. This shift in stance appears to have resonated with the crypto community, which is largely backing Trump. Nevertheless, Trump is not the only candidate who has recognized the growing influence of crypto constituents. While the Biden administration has taken a strict approach to crypto legislation, Vice President Harris has signaled a more positive stance, dismissing allegations that she would crack down on the industry. Harris' support comes amid increased pressure from special interest groups promoting crypto. By August, the crypto industry had already spent a record $119M on donations, according to research by Public Citizen. The report reveals that crypto corporations have contributed almost half (44%) of all corporate money in this year's election. The question remains: which candidate is better for crypto? Perhaps the more relevant question is: does it really matter? Although conventional wisdom suggests that a Trump presidency would be more favorable to the industry, the options market presents a cautiously optimistic outlook despite the election's uncertain outcome. With an estimated 40% of American adults owning crypto, it seems that neither candidate can afford to ignore the demands for a regulatory level playing field. Whether the candidates will fulfill their electoral promises is a different story, but the numbers and public discourse demonstrate the industry's significant progress and evolution into a powerhouse with substantial lobbying power and influence. 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.