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BTC Trade(s) - US elections

Short version: (TLDR)
-Looking to hedge some of our BTC spot longs (go short below 1x leverage), closer to the election, the better, most likely via TWAP/Scaled Orders
- Trump winning seems to be priced in (BTC price action, ETF flows, MSTR insane pump)
- Ideally said trade plays out as January 2024 BTC spot ETF approval (Rally into, sell right after for a short period of time) - then LONG again
- Kamala wins = market short a lot of BTC and DOGE (DOGE is rallying due to Elon Musk involvement in Trumps campaign)

Full thesis (longer read, reasoning, analysis):
Bitcoin is king has been a trade we have ridden since FTX fallout (not because we were geniuses, but because of our shop ethos/belief to denominate in BTC)

Bitcoin Strength is in our opinion healthy (and usual) progression of each crypto cycle

Bitcoin Strength can be proven in several ways:
1) Bitcoin Dominance (BTC.D) at 60.25% (up 16,8% YTD)
2) Sheer amount of BTC spot ETF inflows (Most successful ETF launch ever, (+5.63 bn USD inflows in last month alone, source)

Year-to-date Returns:
BTC +71,74%
ETH +16%
SOL +73%

while OTHERS/BTC is down_only.exe
(Crypto Total market Cap Excluding Top 10 compared to BTC)

I believe the following is natural and healthy progression:
1) BTC/USD makes new ATH, while BTC.D keeps climbing upwards with it
2) Market-wide correction, when already struggling altcoins dump aggressively and make new ALT/BTC lows (and bottom here)
3) ETH starts leading, you see BTC.D collapse, ETH/BTC moons, altcoins run with it (crypto twitter starts cycle-jerking over altseason)

(we are in still in Stage 1, which is happy days for everyone, because ETH leading is Late Cycle behaviour)

What makes me worried (why I am looking to hedge our spot longs around and into elections) - data/arguments/scenarios:

Scenario 1: The Easiest/Most straight forward
Kamala Wins = I expect Markets will derisk big-time if that happens, expecting big unwind in BTC, MSTR, DOGE, DJT.

I think DOGE short with Kamala winning is the most straight forward trade out there, we can also easily scale into it very easily as its very liquid.

Big part of DOGE run-up last few weeks has been Elon Musk being big part of Trumps Rally/Campaign circuit. All that goes to drain if she wins.

Scenario 2: More difficult - nuanced approach
Trump Wins = But its priced in

(please if you reading all the way to here, read the "Execution/Navigating the position"

I believe there are many reasons to believe that Trump winning is at least in crypto-native mind consensus and becomes increasingly priced in with positioning into November 5th (election day)

1) BTC spot ETF record inflows (source)
Last 30 days: +5,63b USD of inflows
Last 7 days: +3b USD of inflows (working days)

2) Orderflow/Positioning
Since October 25th there has been a significant increase in Open Interest (effectively amount of leverage in the system) in BTC and Options Market too (source VeloData)

(If you dont know what orderflow/VeloData is - I have made a Tutorial - click link)

I am worried a lot of the "fresh longs" are taking the Trump Win BTC long, which I expect many to simply take profit.

With amount of aggression in positioning and overall volatility, paired with TradFi volatility, macro and geopolitical headlines - i can see the cascade become very aggressive

Best example I can give is January 2024 - BTC spot ETF approval: (See for yourself in TradingView on Daily chart)

BTC rallied on day of Approval, then on Day 1 of Launch of spot ETFs. then had 15% correction or so.

3. TradFi Up-Only
Especially since approval and launch of BTC spot ETF products in January this year, we have become ever so correlated to TradFi (SP500 / Nasdaq)

Another level of worry to me is TradFi continuously making new all-time-highs

Simply Put: TradFi correct post elections -> BTC follows (I think, at least)

Execution/Navigating the position
I am writing this on Thursday October 31st

US elections are on November 5th (6 days away or 3 working days away) - this is very important differentiation for me

Traditional markets are closed during the weekend, so are BTC spot ETF products.

What I am looking for in each day:
Thursday 31st:
USA PCE Price Index (tend to be volatile day) - if TradFi moons, BTC probably follows

Earnings: Apple, Amazon (some of the biggest companies in the world) strong or weak earnings will move the TradFi, therefore crypto.

+ Monthly Close (likely highest Monthly close ever) - expecting algos to go crazy
+ spot ETF inflows numbers/sentiment

Friday 1st:
USA NFPs + unemployment Rate (tend to be volatile day) - if TradFi moons, BTC probably follows

No earnings on Friday + spot ETF inflows numbers/sentiment

Saturday 2nd- Sunday 3rd:
Not expecting much - will be monitoring sentiment, polls, interviews and getting ready for Day D.

Monday 4th:
no earnings or macro events
Looking for BTC spot ETF inflows numbers

Tuesday 5th:
(Will be a separate update in the Telegram lol)

The closer to elections, past "hurdles" i mentioned above, the better.

A great thread in more context/detail from a friend "Giver" (lazyvillager) Link:

I hope any of this made any sense lol, have a good day and good luck to us all.

RE: My trade "best case" scenario

I know comments/discussions are not available here - but if you have any questions - please DM me on Telegram only

Its impossible without intern to read thru e-mails/DMs on 25 different platforms

RE: ETF flows.. they arent +1 day delayed, or day of, hear Matt Hougan explain

a very useful clip about "Biggest ETF misconceptions" from Bitwise CIO

Timestamp: 23:20

https://www.youtube.com/watch?v=Cg9yT_iddZs

More thoughts on the topic/November 1st:
... more words on the thesis/trade I laid out above and then thoughts on Price Action since I posted my thread above (BTC -4%)

Elections and days after:
US elections are on Tuesday November 5th

but its important to dive deeper how that day actually plays out and what to expect - when:

Polls begin to close in eastern states from 6pm US Eastern Time on Tuesday. By 8pm US ET, polls will have fully closed in more than 20 states, including the crucial swing state of Pennsylvania. Hawaii and Alaska, the western-most states, will close their polls at 12am US ET

When will the election results be announced?
We should have a good sense of who will probably be president by the time polls close in Hawaii and Alaska, which is several hours after vote counting in some key eastern states will have begun.

The world may have to wait a bit longer to hear a final call, especially given how tightly contested some polling has indicated the vote will be.

In 2020 the Associated Press did not declare Joe Biden as the winner of the presidential election until 7 November at 11.26am US ET – four days after the first polls closed. And in 2016 it took until 2.29am US ET the morning after election day to declare Trump the winner.

Therefore, as European, I expect to stay up all night long from Tuesday to Wednesday morning to make sure I do not miss a single market-moving headline. Is it a bit of overkill? Absolutely, but thats what I will do.

So say we know a winner of the elections by November 6th-7th.

Right after on November 7th there is FOMC (where we get potential Rate Cut - how big?)

Even if Trump wins (good for crypto industry / our coins) - BUT

The next presidential inauguration is scheduled to be on January 20, 2025, that is a LOT of time in the meantime from say November 7th to January 20th 2025 before Trump could potentially do anything as president.

Price Action yesterday:
I believe that what we saw yesterday was simply TradFi correlation, see image below

Everything from gold/silver to SP500 & Nasdaq was selling off all day and as mentioned yesterday - we simply correlate to it.

SP500 -1,8%
Nasdaq -2,4%
BTC -4%

Shaky market reaction to Earnings (Link) & upcoming Job Report due later today

I dont personally see that as Derisking pre-elections (just yet - maybe is just my cope)

Update Sunday 3/11:

Since posting my Original Thoughts few days ago, BTC and DOGE have been correcting a lot

Kamala is gaining on polls (now around 50-50%) whilst at the time of posting it was around 65-35 for Donald Trump leading. I believe that is main factor for price action of last 48 hours.

Trump "lead" dropping on sites like Polymarket
-> DJT down -> BTC down -> MSTR down -> Amount of leverage in BTC significantly down

Speaking of Open Interest (OI), I mentioned being afraid of elevated levels (that it increased a lot, very suddenly), but in last 3 days more than 10% of it has closed out, which I see as bullish.

Conclusion: with how sensitive price seems to be around each and every headline or update to Polls (Harris or Trump leading), I expect a lot of volatility to the both sides. I laid out a thesis previously for hedging our spot BTC longs with some shorts. But I am also starting to develop a scenario, where I am looking to long, as market is in my opinion, getting a more "realistic" view of Trumps winning rather than it being consensus.

I am afraid who did not short DOGE around 0.175 or so few days ago will not get a DOGE short entry anymore.

Waiting for CME open. Update on Monday. Have a good sunday. Get some rest

Update Monday 4/11:

Over the weekend we have seen Crypto Natives derisk their long-exposure (as Trump-win trade) following Ann Selzer saying that Harris is ahead in certain states.

Altcoins (OTHERS/BTC and ETH/BTC) got hammered once again, with Bitcoin Dominance (BTC.D) going all the way to 60.6% (a new high - again)

How I plan to approach Tuesday/Wednesday:
Since US elections are technically starting from East Coast to West Coast, the final count/decision will technically not be known until early Wednesday (that means that it will be technically Wednesday trading session that probably matters more to me)
-> please see the Image attached

As European, I will stay up all night from Tuesday to Wednesday to see if I can catch some headlines and or guaranteed drama in the process.

Traders/Investors then have technically 2 more working days to derisk/position themselves (Today and tomorrow) for the elections - what I am looking for as proxies is BTC/USD, DJT, MSTR, US500 and US100 (+BTC ETF numbers today)

I emphasised importance of Wednesday and just day later there is FOMC, where we arguably get another rate cut.

Below is a table which should be close enough to see at what time we should know winners in Battleground/Swing states converted to CET time.

Polls had Trump drop to 50-50 tie-tie with Harris, but as of right now Trump is again leading at 60% on the Polls, BTC doesnt seem to reflect that much, however DOGE does.

Tuesday/Wednesday/Thursday will be absolute chaos, If you have no edge trading lower time frames and struggle to make decisions on the fly, I would encourage you to sit on the sidelines and simply observe.

Expecting fairly calm rest of the monday. Update tomorrow