Bitcoin and Gold Brace for Impact: U.S. Election Could Trigger Massive Volatility

The 2024 U.S. election has become ground zero for market jitters, bringing a one-two punch that’s got everyone from stock investors to gold bugs on high alert. There’s talk everywhere about a coming storm of volatility as the Federal Reserve meets this Thursday to discuss interest rates, while a divided nation heads to the polls. If you think that’s just “business as usual,” think again – this time around, the stakes are sky-high, and every trader out there knows it.

Analysts at Secure Digital Markets have already rung the alarm bell, noting that market volatility is spiking in both traditional sectors and crypto. The Deribit Bitcoin volatility index has jumped to levels not seen in months, signaling that traders expect some serious swings in the days following the election. And if that wasn’t enough, the MOVE index, which tracks U.S. Treasury note volatility, hit a peak, pointing to a similar roller-coaster ride for bonds. It’s like watching the ocean draw back before a tsunami – you know the wave’s coming, you just don’t know how big.

Now let’s talk gold. Early on Monday, gold shot up to $2,748 an ounce, only to pull back as traders decided to reduce exposure before the big events hit. We’re seeing gold hover around $2,736 right now, barely holding its ground, which tells us people are hedging their bets and trying to stay nimble. Gold’s safe-haven status is getting tested as it’s forced to compete with other so-called safe assets like Bitcoin.

Bitcoin, meanwhile, soared past $68,500 early Monday before losing steam and falling to $67,204. Crypto traders are playing it close to the chest, holding off on big moves until the election dust settles. If you ask me, that’s because Bitcoin’s future is now tied tighter than ever to U.S. politics. Both major parties have taken different stances on crypto, with the Trump camp leaning into a pro-Bitcoin narrative while Harris’s team is signaling a more cautious approach. No matter who takes the presidency, we’re likely to see Bitcoin’s price bounce – and possibly break past previous highs – once the political fog lifts.

Bitfinex analysts pointed out that the market is leaning toward a Republican win as favorable for Bitcoin. They’re seeing Trump’s potential victory as a green light, while a Democratic win leaves more ambiguity in the outlook. The options market for Bitcoin reflects this uncertainty, with low volatility in the lead-up to election day but a huge spike expected between November 5th and 8th. Translation? Big swings in Bitcoin prices could happen right after the ballots are counted, but it’s anyone’s guess which way they’ll go.

Another expert, Greg Magadini from Amberdata, expects Bitcoin could shift by $6,000 to $8,000 in the aftermath. He notes that fixed-strike volatility and skew in the options market paint a complicated picture, where a Trump win could push Bitcoin up to the $75,000-$77,000 range. On the flip side, a Harris win might steady the market for now but could set the stage for slower, more regulated growth.

Gold’s story might be simpler, but it’s no less important. If the Fed decides on a rate cut, that’s typically good news for gold. Investors flock to it as a hedge against a weaker dollar, and as we’ve seen time and again, gold is the last man standing when the dollar takes a hit. For many of us who grew up trusting hard assets more than paper promises, this election is yet another reminder of why we turn to precious metals in times of political and economic chaos.

And then there are the altcoins. Sure, some are making modest gains, but most are taking a breather. The election’s impact here is less about individual policies and more about whether risk appetite will grow or shrink. When the big players are nervous, the altcoin market feels it.

So, what’s the takeaway for the average person trying to preserve wealth? If you’re holding dollars and trusting everything will be okay, think again. We’re entering uncharted waters, and there’s no telling how deep the waves will be. Bitcoin and gold offer two very different types of protection, but both have value when traditional assets start to crumble. It’s the classic story – those with a hedge survive the storm, while those without one get swept away.

Action Steps
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