Crypto Market Resurgence Linked to ‘Trump Trade’ and Political Events: Bybit
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The cryptocurrency market’s recent resurgence is linked to a recent series of political events, including an assassination attempt on former President Donald Trump.
According to the Bybit Crypto Derivatives Report, the incident, which occurred on July 13, 2024, has spurred a notable recovery in crypto spot and derivatives markets, a trend referred to as the “Trump Trade.”
The report highlighted that futures yields have rebounded to pre-sell-off levels, demonstrating a healthy demand for leverage through derivatives contracts.
Bitcoin and Ethereum Recover
The recovery is evident in both Bitcoin and Ethereum markets, with open interest levels stabilizing to pre-sell-off conditions.
Notably, ETH futures have shown a strong rally in yields at short tenors, flattening the term structure ahead of the anticipated start-of-trading announcement for its Spot ETFs.
In the perpetuals market, there has been a return to moderately positive funding rates in most markets, except for Toncoin.
The funding rates indicate a healthy demand for long positions, signaling a recovery in market sentiment following the sell-off in early July.
The report added that the options market has also reflected this resurgence, with a rally in short-tenor volatility following the spot price movements.
This has led to a temporary compression and subsequent steepening of the volatility term structure.
Despite short-term price volatility, long-term volatility expectations remain unchanged.
There has been a notable increase in demand for out-of-the-money (OTM) calls, indicating bullish sentiment and a desire for upside exposure.
Meanwhile, implied volatility has increased above realized volatility levels, driven by recent spot price movements.
This trend indicates a higher market expectation for future price fluctuations, with ETH exhibiting a larger volatility premium compared to BTC.
The options market has seen a drop in trade volume over the past few days, but calls continue to dominate open positions.
Political Events Continue to Impact the Crypto Market
The political landscape has had a major impact on the crypto market.
President Joe Biden’s withdrawal from the presidential race has introduced uncertainty about the next Democratic nominee.
Meanwhile, Trump’s rising prospects of re-election, coupled with his pro-crypto stance, have bolstered market confidence.
His upcoming speech at the BTC Nashville conference is expected to further strengthen his position as a pro-crypto candidate.
As reported, there are rumors that Trump may designate Bitcoin (BTC) as a strategic asset at the forthcoming Bitcoin 2024 Conference in Nashville.
Dennis Porter, co-founder of the non-profit organization Satoshi Act, revealed that insider sources have suggested this move is on Trump’s agenda.
“Adding #Bitcoin as a ‘strategic reserve’ to the US Treasury is a no-brainer,” Porter asserted in a follow-up post.
He argued that once the U.S. leads in this direction, other nations are likely to follow suit.
HUGE BRREAKING: FOX News and CNBC report Trump poised to announce ‘#Bitcoin Strategic Reserve’ in Nashville. pic.twitter.com/EefwBFSmSw
— Dennis Porter (@Dennis_Porter_) July 23, 2024
The European Central Bank (ECB) and the Federal Reserve have also played roles in shaping market sentiment, per the Bybit report.
The ECB’s decision to hold interest rates at 3.75% and the Federal Reserve’s expected steady rate at 5-5.25% have contributed to the market’s stability.
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