As traders seek upside exposure in Bitcoin (BTC), foreign exchange (FX) options indicate a continued bullish bias for the dollar index (DXY). Historically, Bitcoin has shown a negative correlation with the DXY. However, as the U.S. presidential election approaches, this dynamic could shift, according to current options pricing.
Bitcoin Options Show Bullish Bias
At the time of writing, one-month 25-delta BTC risk reversals—an indicator of market sentiment—stand at 1.20, indicating a bullish outlook for Bitcoin over the next four weeks. This data comes from the Chicago Mercantile Exchange (CME), which is seen as a key barometer for institutional activity.
The upcoming U.S. Presidential Election, set for November 5, with results expected by November 8, could play a major role in market movements. In options trading, buying a call is a sign of bullish sentiment, while purchasing a put reflects a bearish stance aimed at hedging against downside risks.
Dollar Strength Continues to Rise
Meanwhile, FX options data indicates continued dollar strength. For instance, risk reversals for the euro-dollar (EUR/USD) are currently at -0.39 on the CME, signaling concerns that the dollar will remain strong in the coming weeks. This trend also holds true for the GBP/USD pair.
The euro plays a crucial role in the dollar index, making up 57.6% of the basket. Despite this, Bitcoin has shown resilience, ignoring the dollar’s strength and climbing to nearly $68,000, its highest level since July 29.
Trump’s Odds Boost Bitcoin’s Appeal
Bitcoin’s bullish sentiment is also gaining traction due to the increasing odds of a pro-crypto Republican candidate, Donald Trump, winning the U.S. presidential race. Market participants have started to build positions in anticipation of a Trump victory.
Crypto liquidity provider Zerocap’s Chief Investment Officer Jonathan de Wet noted that the upside potential of a Trump win makes Bitcoin long positions attractive. He predicts BTC could reach $70,000 in the coming weeks, assuming no major crises disrupt the market.
Growing Interest in High-Strike BTC Options
There is strong interest among traders in Bitcoin call options, particularly with a strike price of $80,000. Currently, the most popular option is a $100,000 call, which boasts over $1 billion in notional open interest. This reflects traders’ appetite for significant upside exposure as the U.S. election looms.
According to FRNT Financial, the U.S. election has become a dominant narrative in the crypto space over the last six months. While Donald Trump has presented concrete policy proposals for crypto, the approach of a potential Kamala Harris administration remains uncertain.