Bitfinex Alpha Predicts Storm Brewing in Crypto Market

Key Points:

• Bitfinex Alpha reports Bitcoin experienced a sharp decline driven by election uncertainty, highlighting ongoing market volatility.
• Investors are closely watching the U.S. presidential election, with shifting odds affecting Bitcoin’s options market; Trump’s victory likelihood dropped from 64.9% to 56%.
• Bitcoin’s market share soars over 60%, absorbing most crypto inflows, while altcoins face challenges without new catalysts for recovery.

The latest report by Bitfinex Alpha: “The Calm Before the Storm,” provides insights on the cryptocurrency market’s recent ups and downs.

Bitcoin Experiences Significant Volatility Ahead of U.S. Elections

After eight months of volatility, Bitcoin almost reached its all-time high last week, only to crash suddenly. The report illustrates this recent surge with the “Trump Trade” narrative- that is, market excitement first appeared due to speculations over the forthcoming presidential election in the United States.

The uncertainty associated with the election result has highly impacted investors’ psychology, reflected in the Bitcoin options market. The pre-election expectation was that a Republican victory might favour Bitcoin’s fortune, while a Democratic win had, as a consequence, kept the trend unclear. Curiously enough, the Trump probability dropped from 64.9% to 56%, reflecting the shift in market expectations.

Read more: Bitfinex Hacker Funds Stolen in $20M Attack, Laundered via Binance

Bitcoin’s Rising Dominance Signals Challenges for Altcoins

The implied volatility of the front-end contracts has been surprisingly stable in the options market ahead of Election Day on November 5, reflecting cautious investors sitting on the sidelines and waiting. Bitfinex Alpha expect that volatility will increase between November 5 and 8 and lead to wild market swings once the election results have been decided. If this does not happen, volatility will be low, which indicates a conservative mood in the market.

Bitfinex Alpha report also points to the poor performance of the altcoin market, whereby dominance increases above 60% to a new cycle high. This dominance would imply that Bitcoin is sopping up most of the inflows into crypto assets, thus leaving altcoins struggling for momentum. The prospects of altcoins seem grim in the absence of fresh catalysts.