As the countdown for the all-important political battle between Donald Trump and Kamala Harris inches closer to a crescendo, cryptocurrency investors may be tempted to monitor crucial data on election night.
What happened: Unlike traditional markets, cryptocurrencies can be traded 24/7, providing an opportunity to track market moves in real-time.
According to cryptocurrency market data provider Kaiko, tick trades data, which tracks every executed buy or sell trade on every single cryptocurrency market worldwide, could be a key metric to consider.
The firm noted that cumulative volume data (CVD) was "particularly insightful" during the September debate between Trump and Harris, and will be again during the election.
Additionally, Bitcoin's BTC/USD buying and selling activity on Coinbase, the biggest cryptocurrency exchange in the U.S. and institutional investors' favorite, could reveal how the market is reacting to election numbers.
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Derivatives could become another key indicator of market response.
The moves in perpetual futures Open Interest (OI) linked to Bitcoin and Ethereum ETH/USD could indicate the market's tilt toward a bullish or bearish side. The dollar-denominated OI for Bitcoin pumped to record highs last week as the cryptocurrency nearly broke its all-time high.
Funding rates would be another "crucial" metric to monitor, Kaiko stated. Rates stayed steady last week despite a jump in OI, reflecting traders' caution before elections.
Implied volatility, a forward-looking measure of volatility and risk used by options traders, was also identified as an important metric to watch.
Why It Matters: Market analysts, including Geoffrey Kendrick, head of crypto research at Standard Chartered, told Benzinga that Bitcoin’s trajectory in the lead-up to the election may see increased volatility, urging traders to approach this period with a careful strategy.
Kendrick expected the leading cryptocurrency's price to remain below $73,000 due to potential pre-election profit-taking.
He also said that options markets were pricing in an anticipated surge in volatility comparable to the pre-launch period of the first Bitcoin exchange-traded funds.
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