Cyber Monday Deal: Up to 60% off InvestingProCLAIM SALE

Crypto ETFs see big inflows ahead of U.S. election, traders brace for volatility

Published 2024-11-01, 01:07 p/m
© Reuters. FILE PHOTO: Representation of Bitcoin cryptocurrency is seen in this illustration taken January 11, 2024. REUTERS/Dado Ruvic/Illustration/File Photo
BLK
-
BTC/USD
-

By Lisa Pauline Mattackal

(Reuters) - Investors have plowed money into funds tracking bitcoin, betting on a return of Republican Donald Trump to the White House even as they expect wild price swings in the world's largest cryptocurrency during the election week, data showed.

Exchange-traded funds (ETF) tracking the spot price of bitcoin notched net inflows of $917.2 million on Wednesday, the biggest one-day increase since March, according to the Block, a data and news provider.

BlackRock (NYSE:BLK)'s iShares Bitcoin Trust ETF, the largest spot bitcoin fund by assets under management, pulled in $872 million in net flows, the largest one-day haul since its launch in January.

Bitcoin soared around 12% in October in anticipation of a second presidential term for Trump, who has styled himself as a pro-crypto candidate.

"The rising odds of a Republican sweep (has) fueled optimism for potential crypto-friendly legislation in Congress post-election," analysts at Ryze Labs said.

Polls show Trump in a neck-and-neck race with Democrat Kamala Harris, though betting sites such as Polymarket are pricing in much greater odds of a Trump victory.

Given the uncertainty, futures markets show investors are bracing for a volatile election week. Forward-implied volatility data from crypto derivatives exchange Deribit points to potential daily price swings of about 3.7% in bitcoin in either direction through Nov. 8.

© Reuters. FILE PHOTO: Representation of Bitcoin cryptocurrency is seen in this illustration taken January 11, 2024. REUTERS/Dado Ruvic/Illustration/File Photo

Open interest on crypto derivatives exchanges - an indicator of market activity - hit an all-time high of $43.61 billion on Tuesday, as per data provider Coinglass.

The derivative activity, however, indicates traders expect volatility to subside and bitcoin to continue rising after the election week, said Luuk Strijers, CEO of Deribit.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.