Market Volatility and Institutional Behavior During Election Week | Weekly Market Insights Review

On November 5th at 8 PM, during a live broadcast on the official Matrixport YouTube channel, Matrixport's Asset Management Director Daniel analyzed the market fluctuations from the previous week (October 30 - November 4). The BTC price experienced significant volatility during the election week, influenced by the uncertainty of the U.S. elections and rising risk aversion in the global market. Daniel discussed the driving factors behind BTC's volatility, changes in hedging demand in the options market, and the support provided by the continuous inflow of institutional funds, highlighting potential opportunities and strategies for investors in this volatile market.

The live broadcast content is as follows

Recently, the BTC price has been significantly influenced by macro uncertainties such as elections, leading to increased volatility. BTC once surged to a high of $73,000, but quickly fell back due to market expectation adjustments. Both bulls and bears are engaged in fierce competition, with rising hedging demand in the options market indicating investors' heightened sensitivity to short-term fluctuations. Overall, BTC's market share continues to steadily increase, demonstrating its relative strength in a high-volatility market.

Analysis of Market Volatility Reasons

Impact of Elections on the BTC Market

During the U.S. presidential election, the market's focus on the election results led to increased volatility in global capital markets, with the cryptocurrency market showing particularly pronounced fluctuations. As a safe-haven asset, BTC typically exhibits high sensitivity during major events. The uncertainty surrounding the election results has triggered traders' expectations for significant fluctuations in BTC prices, adding short-term volatility risks to the market.

Increased Market Risk Aversion

On the eve of the election, CME (Chicago Mercantile Exchange) BTC options data showed a significant rise in the market's hedging demand against BTC price declines. The market's avoidance of short-term risks indicates concerns about a potential BTC pullback, with volatility expectations in the options market further climbing. Market sentiment reminds investors to manage risks in advance to guard against short-term shocks from the election results.

Current Context of the Options Market and Institutional Behavior

Hedging Signals from the CME Options Market

As the election week approaches, demand in the CME BTC options market has increased, with traders ramping up hedging demands to prevent price fluctuations triggered by the election results. The market's volatility reflects traders' concerns about a short-term decline in BTC.

Institutional Investors' Attention to BTC

Recently, several institutions, including British pension funds, have announced the inclusion of BTC in their asset portfolios, marking an elevation of BTC's status in traditional finance. The inflow of institutional funds not only strengthens the long-term support for the BTC market but also reduces short-term volatility caused by retail investors. VanEck's model predicts that BTC may be included in central bank reserve assets in the future, further solidifying its position as a safe-haven asset.

Investment Directions to Watch

Long-term Holding Strategy for BTC

BTC is regarded as "digital gold," and its anti-inflation and safe-haven properties make it an ideal store of value in an uncertain macro environment. Long-term holding of BTC can help investors achieve steady appreciation in the face of market volatility, especially by staying on the sidelines during the election week to control risks. For investors looking to preserve value in the cryptocurrency market, long-term holding of BTC offers excellent return protection.

Risk Aversion and Market Observation Strategy

Due to the short-term uncertainties brought about by the election, investors may choose to stay on the sidelines to reduce exposure to risks from market volatility. Re-entering the market once the environment becomes clearer can help avoid short-term volatility risks, providing investors with stable long-term returns. This strategy is suitable for investors looking to preserve value over the long term, as it avoids short-term risks by observing during periods of volatility.

Conclusion

In the context of heightened market volatility, the uncertainty surrounding the U.S. elections has significantly increased the demand for safe-haven assets, with BTC drawing considerable attention due to its safe-haven attributes. Meanwhile, the CME options market shows strong hedging demand, reflecting a cautious attitude towards short-term market volatility. The continuous participation of institutional investors further strengthens BTC's market position and long-term support.

For more exciting content, you can check out the YouTube replay: https://youtube.com/live/pYCnmqt1Ub4?feature=share