Crypto traders are bracing for a short burst of market volatility on the back of the U.S. midterm elections, not a lasting turbulence.
That is evident from bitcoin’s $BTC$77,884.65 implied volatility (IV) term structure. IV is the size of price swings options traders expect, and the term structure plots it across different expiry dates. Expiry dates are dates when call (bullish) and put (bearish) bets are settled and contracts cease to exist.
The curve normally slopes upward, because the further out an expiry is, the more time there is for something to move the price. However, as of this writing, IV on options expiring Nov. 4, just after election day, is about 43.5%, notably above the roughly 36% for the expiries that follow.
That bulge shows traders are pricing increased volatility as early results and newsroom calls roll in, but not a lasting rise in turbulence. The curve settles back near 36% by late November. Ether’s IV term structure shows a similar pattern.
The picture in futures is different. Open interest, the total value of outstanding futures contracts, has held largely steady at $58 billion and $23.58 billion, respectively, over the past 24 hours.
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