A message from Agoric

Bitcoin settled above $67,000 following a brief surge above $68,000 on Sunday after President Biden said he would not seek reelection. BTC initially slumped after Biden's announcement before recovering to over $68,400 and was trading around $67,450 at the time of writing, 0.7% higher than 24 hours ago. The CoinDesk 20 Index (CD20), which measures the broader digital asset market, rose 1.25%. SOL and DOGE led the gains with increases of around 4.3% and 5% respectively.

President Biden's withdrawal from the November election dropped pro-crypto candidate Donald Trump's probability of victory from 71% to 65% on Polymarket. Vice President Kamala Harris' odds almost doubled to 30% from 16%. While Biden's decision tempered Trump's White House prospects, the market's response was initially positive. "Biden’s withdrawal has opened up a possibility where, regardless of who sits in the White House, the U.S. government may embrace a more constructive stance towards the digital asset industry after November," Singapore-based crypto research firm Presto wrote in a Monday note. "Whether Harris or any other contenders will pursue such a path remains to be seen, but the optionality that hardly existed before is now there."

Bitcoin's price is too high compared to its production cost of $43,000 and any increase is likely to be a short-term one, JPMorgan said in a report last week. BTC's volatility-adjustment comparison to gold was $53,000, further suggesting it is overpriced, the bank said. JPMorgan noted that momentum in bitcoin futures has been weak in recent weeks due to BTC liquidations by creditors of Gemini, Mt. Gox creditors and the German government. Liquidations are expected to subside this month and the bank continues to look for a rebound in Chicago Mercantile Exchange bitcoin futures positioning into August.

Donald Trump's impending appearance at the Nashville Bitcoin conference has traders preparing for fat-tails – extreme or unusual price movements in the leading cryptocurrency.

Activity in the options market listed on Deribit and tracked by Amberdata shows a noticeable increase in the "butterfly index," which measures the volatility of the out-of-the-money (OTM) 25-delta (∆25) call and put options listed at a distance from the going market price of bitcoin (BTC) relative to at-the-money (ATM) options closer the spot price. The spike in the index indicates expectations for more extreme market movements.

"This week we’re going to hear Trump speak at the Nashville Bitcoin conference. As long as Trump remains a front-runner, this is a potential catalyst for 'something to happen' this week. The derivative markets seem to agree, and we’re seeing pricing support the 'something is about to happen' narrative." Greg Magadini, director of derivatives at Amberdata, said in an email.

"Speculation is high that [Trump] will announce bitcoin as a strategic reserve asset, which could trigger a parabolic rise in bitcoin's price," Markus Thielen, founder of 10x Research, said. "Taking profit, or even shorting bitcoin ahead of Trump’s Nashville speech, could turn out to be an expensive exercise."

- Omkar Godbole