Bitcoin Futures Market Witnesses Euphoria With Trump’s Victory

Key Points:

• Bitcoin price surged past $75,000 following Donald Trump’s election win, with the Bitcoin futures markets signalling strong bullish sentiment.
• Demand for Bitcoin derivatives rose sharply, with U.S. institutions favouring CME futures and offshore investors increasingly turning to perpetual contracts.

According to Bloomberg, fresh momentum is seen in the Bitcoin futures market amid expectations that a possible comeback of former U.S. President Donald Trump into office may give birth to friendlier cryptocurrency policies.

Read more: Trump’s Return Could Bring Crypto-Friendly SEC and Banking Committee

Bitcoin Futures Market Jumps on Trump’s Win, Sets Sights on $80,000

The price of Bitcoin jumped to a new high after the election result and blasted its way through $75,000, while the options market placed an $80,000 target for late November contracts, reflecting the increasingly bullish mood among investors.

The following, with respect to the “risk-on rotation” of the derivatives market following the victory of Trump, were the comments from Vetle Lunde, head of research at K33 Research. “CME’s basis has surged from 7% yesterday to highs above 15% today, while perps have moved from trading below the spot market to its largest premiums to the spot market since March,” Lunde said.

The Bitcoin futures market contracts are the preferred way for U.S. institutional investors to enter the crypto market, especially in bullish periods, on the CME derivatives exchange. Meanwhile, offshore investors increasingly like perpetual futures, and an increase in the funding rate signals heightened demand for leverage.

ETF Flows and a Potential Price Correction

While excited, some participants are cautious on price corrections. Comparisons have been drawn to the previous rally that happened in March, which garnered significant gains and large liquidations. Anxiety has therefore increased from historical volatility associated with Bitcoin bull runs, similar to what was witnessed when the Bitcoin ETFs went live at the beginning of this year.

The flow into ETFs could also reverse, which is what traders are looking for. Although Bitcoin-tracking ETFs registered significant outflows on Monday, demand should reverse, particularly at U.S. trading hours starting Wednesday. Indeed, many are expecting a strong inflow into Bitcoin ETFs to drive further price gains.