On November 6th, according to Caixin report (edited by Zhou Ziyi), as the final voting results of the USA presidential election are about to be announced, the cryptocurrency circle may face a significant split - compared to large-scale cryptos$Bitcoin (BTC.CC)$such as Ethereum, smaller cryptocurrencies like Dogecoin and Solana may face greater risks and volatility.

As of Tuesday (November 5th), bitcoin rose by 7.8% to $74,768, surpassing the historical high of about $73,800 set in March.

On the same day, Dogecoin once surged over 26%, partly due to a comment from its long-term supporter Elon Musk, where he stated that if Donald Trump wins the election, he will establish a Department of Government Efficiency (DOGE). The token's trading price has doubled in 2024.

The founder of the crypto fund Split Capital, Zaheer Ebtikar, believes, "For bitcoin, the election is not important, however, for altcoins, they are the biggest winners or losers of this election. If Kamala Harris wins, they may not bounce back as much."

Altcoins refer to smaller cryptocurrencies compared to bitcoin, which often perform better in past market uptrends, especially after the significant rise of the top cryptocurrency bitcoin, investors tend to shift towards small cap coins. For most of this year, altcoins have struggled to outperform bitcoin overall.

Ebtikar added, Harris' victory may mean more regulatory crackdowns on the crypto industry, perhaps bitcoin and Ethereum will survive, as these two tokens are considered more decentralized compared to other tokens.

During the election, Republican candidate Donald Trump took a strong stance in support of cryptocurrencies, while Democratic candidate Harris promised to support a regulatory framework for digital assets. Crypto supporters generally agree that Trump's victory would be much more beneficial to the cryptocurrency industry.

Greater fluctuations

Overall, traders generally believe that the election results will be a good thing for the crypto market in the long run. However, in the short term, the market is expected to be severely affected.

Shiliang Tang, President of Arbelos Markets, stated, "In the medium term, we believe that regardless of who wins, the crypto market will rise because we will get past the election and return to macroeconomics and the Fed."

However, Vetle Lunde, Head of Research at K33 Research, stated in a report on November 5th that "the market will be extremely sensitive to the election results. In the very short term, Harris's victory will push down cryptocurrency prices. That said, we expect this reaction to be short-lived as the elimination of uncertainty and the expansionary macro environment will support strong momentum for cryptocurrencies by the end of the year."

Cryptocurrency options indicate that short-term volatility across the entire asset class will soar before the election results are announced.

Data compiled by the largest options exchange Deribit shows that put options are priced higher, while call options have exercise prices far above the current price. This composition indicates differing market views on the election results, with more traders hedging against the possibility of Harris winning, while others continue to bet on Trump's victory.

Editor/ping