Nima

Bitfinex: The prospects for altcoins to recover in the short term are minimal

ChainCatcher message, Bitfinex released a report indicating that after experiencing 8 months of turbulence, Bitcoin nearly broke its all-time high last week but then faced a sharp pullback. We believe this rebound was initially driven by the "Trump trade" narrative, and was subsequently affected by the uncertainty surrounding the results of tomorrow's U.S. presidential election. This lack of confidence is also reflected in the Bitcoin options market.As election day approaches, the market generally believes that a Republican victory would be favorable for Bitcoin, while the prospects of a Democratic win appear more ambiguous. The average odds of Trump winning have decreased from 64.9% to 56%. In the options market, the implied volatility of contracts nearing expiration has been unusually low ahead of election day. This calm in volatility indicates that investors are on the sidelines, waiting for clarity. However, it is expected that volatility will surge between November 5 and 8, which could trigger significant market fluctuations; if volatility fails to materialize, it may indicate a deeper caution in the market.A similar coolness has emerged in the altcoin market, with Bitcoin's market dominance exceeding 60%, reaching a new cycle high. Whenever Bitcoin pulls back, altcoins face severe declines. Ethereum and SOL have both dropped about 12% from recent highs, while Ethereum has fallen 40% since the initial ETF rebound. The speculative interest that once supported altcoins seems to have vanished, as reflected in stable funding rates and overall market sentiment being low. With Bitcoin absorbing most of the inflows into crypto assets, altcoins struggle to keep up, and without new catalysts, their prospects for a short-term recovery appear minimal.Even during last week's pullback, Bitcoin's overall resilience since the September lows is noteworthy. In summary, the current market dynamics suggest that the upcoming week will be very eventful. Whether you are a trader, investor, or casual observer, the road to election day is bound to be anything but uneventful.
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