Crypto Derivatives Market Sentiment Turns Bullish After US Elections Conclude: Report

Just days after the conclusion of the US presidential election, investor sentiment in the crypto derivatives market has changed, revealing a significant shift to the bullish side and a strong appetite for leveraged long positions.

According to a crypto derivatives analysis report by leading digital asset trading platform Bybit, in collaboration with research and analysis firm Block Scholes, there is open interest in perpetual and futures contracts and a decrease in short-term volatility. The report says this shift in sentiment has driven positioning across all markets to near-record highs.

The derivatives market turns bullish

The state of the derivatives markets shows that cryptocurrency traders believe in a more stable environment and are eager to maintain exposure to leveraged long positions as bitcoin (BTC) reaches new highs. Leveraged positions were reduced as the market experienced volatility due to uncertainty over the outcome of the election; however, they have recovered as traders are now willing to accept the risk.

“Futures open interest rose on election night as traders quickly re-entered leveraged positions for exposure to the rally in the spot price. Perpetual open interest rose sharply overnight , continuing the sustained activity in trading volumes seen over the weekend as traders seek exposure to further upside price action,” the report states.

Perpetual funding rates are also positive, indicating that traders are willing to pay a premium for leveraged long exposure, although BTC has pulled back a bit from its new all-time high. This has led to a fall in the implied volatility of BTC and ether (ETH) in short-term options.

Bitcoin’s term structure is currently flat, while ether is in a steep curve after two weeks of prolonged inversion. Bybit and Block Scholes stated that this change indicates the resolution of event risk, as the crypto market’s favorite candidate was elected without any sign of a contested result.

Perpetual exchange open interest increase

In addition, the derivatives market is experiencing high trading volumes, indicating sustained market activity. There is also renewed interest in directional bets, which shows that perpetual exchange open interest is mirroring the trend in futures contracts.

The sharp increase in perpetual exchange open interest indicates that traders are re-entering positions to take advantage of the positive move following the election results.

“This sustained volume and increased open interest indicate that market participants are actively positioning in response to the growing clarity surrounding the election outcome,” the report added.

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