Bitcoin (BTC-USD) traders are on high alert this week, bracing for potential market upheavals as speculation grows around former President Donald Trump’s upcoming speech at the Nashville Bitcoin conference. With Trump expected to possibly announce a bigger role for Bitcoin in the U.S. financial system, market participants are preparing for extreme price movements in the cryptocurrency.
BTC Price Fluctuations Expected
Activity in the options market is a clear indicator of the heightened anticipation. Data from Deribit, tracked by Amberdata, reveals a significant increase in the “butterfly index,” which measures the volatility of out-of-the-money (OTM) call and put options relative to at-the-money (ATM) options. This spike suggests traders are gearing up for potential extreme market shifts.
Greg Magadini, director of derivatives at Amberdata, commented, “The derivative markets seem to agree, and we’re seeing pricing support the ‘something is about to happen’ narrative.” This indicates a broad market consensus that Trump’s speech could trigger notable price fluctuations.
Trump’s Potential Announcement
The sentiment around Trump’s Nashville speech, scheduled for July 27, centers on the possibility of him announcing Bitcoin as a strategic reserve asset. According to CoinDesk, Markus Thielen, founder of 10x Research, noted, “Speculation is high that he will announce bitcoin as a strategic reserve asset, which could trigger a parabolic rise in bitcoin’s price.” Such a declaration could indeed set off a significant upward price trajectory for Bitcoin.
Butterfly Index and Tail Risks
The increased activity in the butterfly index points to traders hedging against “fat tails,” or extreme market events. These movements are not confined to Bitcoin alone. The upcoming debut of spot Ethereum ETFs in the U.S. and the Federal Open Market Committee (FOMC) meeting on July 31 also contribute to the current market dynamics.
Griffin Ardern, head of options trading and research at BloFin, told CoinDesk of broader market concerns, stating, “Traders and market makers are worried about tail risks from the FOMC on July 31 and the upcoming spot ETFs, which has pushed up the pricing for BTC’s tail risks [butterfly index].”
Polymarket Bettors
In parallel, market speculation was not limited to Bitcoin. Over on Polymarket, bettors had been heavily wagering on President Joe Biden’s political future. Nearly $80 million was placed on various contracts related to Biden’s potential resignation or continuation as the Democratic nominee.
At the end of June, the market betting on Biden remaining the nominee was trading at 90 cents, indicating a 90% chance. However, calls for Biden to drop out increased volatility in the first weeks of July. According to Polymarket data, the market shot up to 100% moments before the media officially announced Biden’s resignation, showcasing the foresight of some traders.
One notable bettor, AnonBidenBull, lost nearly $1.8 million on this contract, while another, ‘therealbatman,’ lost around $1 million betting on Biden’s continuation in the race. These losses underscored the high stakes and unpredictability involved in political betting markets.
Upcoming Economic Data
In addition to Trump’s speech, traders are also eyeing upcoming economic indicators that could influence market movements. This week will see the release of advance estimates for U.S. GDP growth for the June quarter, the Fed’s preferred inflation measure, core PCE prices, durable goods, and retail sales for June. These numbers are crucial as they will likely impact expectations for Fed rate cuts and demand for risk assets, including Bitcoin.
What Is BTC’s Price?
At the time of writing, Bitcoin is sitting at $66,796.
Looking Ahead
As the crypto world watches with bated breath, Trump’s Nashville Bitcoin conference speech could be an important moment for Bitcoin’s role in the U.S. financial system. The speculation around Trump possibly announcing Bitcoin as a strategic reserve asset has already stirred significant activity in the options market, evidenced by the spike in the butterfly index. Traders are not only preparing for potential extreme price movements in Bitcoin but are also hedging against broader economic uncertainties, including the debut of spot ether ETFs and upcoming FOMC decisions.
