Analysis: Bitcoin Implied Volatility Curve Shows a "Bump," Market Focuses on U.S. Midterm Elections

Odaily Report: Crypto market traders expect the U.S. midterm elections to trigger short-term volatility but are unlikely to cause sustained turbulence. The implied volatility (IV) term structure for Bitcoin options shows that options expiring on November 4 have an IV of approximately 43.5%, notably higher than the roughly 36% level for contracts expiring afterward, indicating that the market is pricing in volatility from early voting results and media projections following election day. Ethereum options show a similar pattern, with the IV curve expected to decline to around 36% in late November.

Meanwhile, Bitcoin and Ethereum futures open interest remained largely stable over the past 24 hours, at approximately $58 billion and $23.58 billion respectively, suggesting traders prefer hedging existing positions through options rather than adding new futures bets. Laevitas noted that demand for downside protection may dissipate quickly after the election event concludes, and the bump in the IV curve may disappear accordingly.

In the market, Bitcoin and Ethereum are currently above $78,000 and $2,290 respectively, having rebounded from lows following last Friday's attack on Binance. Alex Thorn, Head of Research at Galaxy, noted that Bitcoin has closed above its 50-week moving average for the seventh consecutive week, demonstrating strong resilience. However, U.S. spot Bitcoin ETFs saw net outflows of approximately $643 million last Friday, the largest single-day net outflow since June, which remains worth monitoring. (CoinDesk)