Institutional Investors Position for Bitcoin Volatility Into the U.S. Election

Some $350 million notional value of November call options traded on CME with a breakeven bitcoin price of nearly $80,000, anticipating a rally next month

Institutions are positioning for a potential spur of volatility in bitcoin (BTC) prices as the U.S. elections approach on November 5.

Short-term borrowing rates on institutional crypto lending markets have been rising as the election approaches, Sidney Powell, co-founder of crypto lending venue Maple Finance, told CoinDesk in an interview.

"We're seeing more inbound requests for borrowing from some of the larger institutions. Demand for larger-ticket loans and borrowing against open trade credit has increased significantly," Powell said.

These institutions, which typically include prime brokerage firms and over-the-counter desks, might be anticipating some upside volatility and a run-up in asset prices, Powell said, which could explain the borrowing to build up inventory to provide margins to other clients and peers, or to go long with leverage into a potential bull market.

Positioning on derivatives markets also suggests that institutions are allocating to crypto ahead of the elections.

Options on the Chicago Mercantile Exchange (CME) bitcoin futures market, the favored venue for more-sophisticated, traditional institutional participants, experienced some of its busiest days recently, said Joshua Lim, co-founder of principal crypto broker Arbelos Markets.

"We're seeing a huge uptick in CME call buying into the election, including some of the largest ever prints on the exchange," Lim told CoinDesk in a Telegram message.

Over $350 million notional value of November calls traded through the past week, with a breakeven price of around $79,300 at the end of November expiry, meaning that these traders are anticipating to profit from rising BTC prices next month.

"Very bullish positioning into the election," Lim said. "It seems clear that funds dedicated to crypto strategies continue to grow as the asset class matures."

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