The stock markets continue to be absolutely marked by Donald Trump's victory in the United States presidential elections. The victory of the Republican Party has been overwhelming: in addition to the presidency, will control both Houses of Congress, at least, for the next two yearswhen the next 'midterms' are held in November 2026. Consequently, the assets that could benefit the most from Trump have skyrocketed in the stock market. Among them, of course, is bitcoin (BTC).
And it is that The queen cryptocurrency has been unleashed since Trump's victory became known. The president-elect's numerous promises during the campaign laid the groundwork for a 'rally' like the one we have observed in the last two weeks, which has led bitcoin to break one all-time high after another. The latest bullish scale of the king crypto asset peaked at $93,400 after exceeding $90,000 for the first time in its history. Since then, the market has reaped profits after recent notable increases, but many experts believe that this rally has come to an end. «This strong bullish move suggests that the market had not clearly and completely anticipated a Republican victory. The path to $100,000 at the end of the year is still open«say analysts at the blockchain analysis firm Kaiko Research.
ETFS SHINE
Much of the successful rise of bitcoin has to do with BTC Spot Exchange Traded Funds (ETFs). Since the election, bitcoin ETFs have seen a whopping more than $4 billion in net inflows, recording two of the best days in its short historywith inflows of more than $1 billion, according to data from Farside Investors. He IBIT BlackRock was one of the main beneficiaries of the growing demand, recording almost $2 billion in flows this week, while its assets under management increased to more than $40 billionplacing it in the top 1% of all stock ETFs in the world. «I thought things were cooling down, but no, IBIT reached $5 billion today for the first time in its history. Only 3 ETFs and 8 stocks have seen more movement today. Up to $13 billion in 3 days this week. Their counterparts have also recorded higher volume, but on a smaller scale. FBTC made $1 billion, the biggest day since March,» explained Bloomberg Senior ETF Analyst Eric Balchunas last Friday. Likewise, this expert highlights that assets in spot bitcoin ETFs have reached $84 billion. dollars in assets under management, that is, two-thirds of what gold ETFs have. «Suddenly there is a decent chance they will overtake gold before their first anniversary (we predicted it would take 3-4 years)»he added. In addition to structured products such as BTC and ethereum (ETH) ETFs, which also benefited from this rally, traders have increasingly used derivatives. As a result, BTC perpetual futures markets hit all-time highs last week. On November 11, open interest in BTC in dollar terms reached an all-time high of $20.7 billion on Binance, Bybit, and OKX. «Funding rates also turned positive, indicating growing bullish demand. However, open interest in BTC terms remains lower than October 2022 levels, and funding rates remain lower than in March, when BTC also hit an all-time high. This suggests the move is not driven by excessive leverage«, they point out from Kaiko.
VOLUMES AT HIGHEST IN MARCH
According to the Parisian firm, Cryptocurrency trading volumes have reached their highest levels since March. Specifically, BTC recorded three of its five highest daily volumes this year in Novembersurpassing volumes seen during the August 5 sell-off and its previous all-time high on March 5. This increase, they indicate, suggests greater market shareperhaps boosted and suggests that the rally could have more momentum. «Although it is difficult to determine whether the increase in trading is driven by retail or institutional traders, we have observed an increase in average trade size, especially on institutional-only exchanges like LMAX Digital. This could suggest increasing participation of larger traders, although average trade size has not yet reached the levels seen in January«, they point out from Kaiko. Something similar has happened in the options markets. According to data from Deribit, the largest crypto options exchange in the world, $7.9 billion in BTC options were traded just the day after the elections Last Monday, after a weekend of unusual activity in the markets, more than 8.2 billion options were traded, of which 5 billion were bullish bets. pace. «Options activity on Deribit indicates that traders expect the current rally to continue through the end of the year. Since November 6, the day after the US elections, intense trading has been observed in bullish options with strike prices between $90,000 and $120,000 at Deribit's December 27 expiration,» Kaiko points out. «Many of these options are already in profits, with BTC trading above $91,000 on November 13. This rapid price increase has led to a reassessment of risk in Deribit options, as reflected in our implied volatility data,» adds the French firm.
IS THE RALLY SUSTAINABLE?
Kaiko also highlights in his analysis that, after the US elections, bitcoin's implied volatility (IV) fell, which indicated «a decrease in uncertainty» in the market. But that has been short-lived.
As the reigning cryptocurrency has reached new all-time highs, contracts with short-term expiry saw higher IVs than long-term ones, creating an inverted term structure. This is usually a sign of elevated risk in the short-term market.
«Reversal intensified between Sunday and Monday (November 10-11) when BTC traded near $90,000 for the first time. BTC's IV at the November 15 expiry on Deribit rose to 75% from a low of 44% post-elections», details the French firm. Likewise, these experts highlight that there is demand for both upside and downside optionssuggesting that investors are looking for hedges against volatility, again, both on the upside and on the downside. «This is typical in crypto markets, since asset prices are prone to sharp movements up or down,» these analysts add. However, the macroeconomic context and other catalysts are managing to support prices, so Kaiko wouldn't be surprised if they continued to rise. In this sense, the French firm points out that the 95% confidence level of the 'Value at Risk' (VaR) has decreased «constantly» since August, indicating a reducing downside risks. This is a risk indicator used to quantify the extent and probability of potential losses in a portfolio. It is especially valuable in risk management as it assigns an effective value to a specific confidence level. «For a hypothetical portfolio that invested $100,000 in BTC six months ago, the 95% daily VaR is currently $2,700, meaning losses greater than this amount would occur about 5% of the time, or one of every 20 days», concludes the French firm.