Crypto Markets and Polymarket Moves on Election Eve

Source: Coin Metrics Market Data

As each election approaches, volatility tends to increase as market participants process new information and adjust positions based on the outcome. The chart above shows actual volatility over a seven-day period, with volatility typically rising ahead of previous elections (2016 and 2020) and remaining elevated for about 30 days after the election. While volatility has been relatively subdued ahead of the 2024 election, it is likely that volatility will rise in the coming days.

Polymarket User Behavior

Since early October, the odds of Donald Trump and Kamala Harris winning the presidential election on Polymarket have expanded significantly, from about 50% each to Trump leading by about 34%. However, in the last week, that gap has reversed, with Harris's probability of winning the election at 46%, closing the gap between the two candidates. Similar changes in odds have been seen on Kalshi, a regulated U.S. prediction market, as well as a number of other predictions.

Source: Coin Metrics Labs

While we do see some volume in the Biden win market during the US market hours, the highest volume period is always the US overnight session, especially 01:00-04:00 ET.

What is the outlook for majors and altcoins? Metrics to watch

There has been a lot of discussion about the outlook for different sectors of the digital asset market and how the election results could affect their trajectory. Segmenting the market into majors (BTC, ETH, and SOL) and altcoins within the datonomy™ space (excluding on-chain derivatives such as stablecoins) shows a clear difference in credible 14-day spot volumes. Currently, major currencies are trading at $19.7 billion, while altcoins are trading at $5.4 billion. While major currencies are trading about 2x higher than past averages, overall levels remain relatively subdued, awaiting election results and potential policy changes to confirm directional trends.

Source: Coin Metrics Market Data Feed and datonomy™

While Trump’s victory was seen as positive for BTC and crypto assets more broadly due to his initiatives around Bitcoin and his involvement in World Liberty Financial, a DeFi , lending protocols), but how the various sectors react to either outcome remains to be seen. Heading into the election, some metrics could serve as indicators of changing market sentiment. The ETH/BTC ratio is at 0.035, close to levels seen in April 2021, while the SOL/ETH ratio is near its all-time high of 0.07. Speculative activity has intensified, with BTC futures open interest near all-time highs ($34 billion). As a result, implied volatility is expected to move further higher, reflecting market expectations.

Conclusion

As the U.S. election approaches, expectations are growing among global market participants and the crypto ecosystem. While the election results could impact the short-term trajectory of digital assets, the sector remains on a path of sustained, long-term growth as market uncertainty recedes. As we have seen in past cycles, Bitcoin has demonstrated resilience across multiple elections, solidifying its position as an apolitical macro asset. As the broader crypto ecosystem continues to mature, we can expect greater investment participation and deeper on-chain adoption to shape its evolution over time.