Bitcoin Volatility Exceeds Ether Amid Macro Risks

Explore Bitcoin implied volatility trends and their impact on trading. Make informed decisions and stay ahead with our expert insights.
Bitcoin implied volatility

Bitcoin implied volatility has been consistently higher than ether’s over the past 20 days, as indicated by Deribit’s forward-looking 30-day implied volatility index. This marks the longest stretch since the index’s inception in early 2021. Implied volatility, an estimate of price turbulence over a specific period, is based on options prices. The negative spread between BTC DVOL and ETH DVOL demonstrates that traders expect higher volatility in bitcoin relative to ether.

Bitcoin as a Macro Asset

Since the coronavirus-induced crash in March 2020, bitcoin has evolved into a macro asset, taking cues from the Federal Reserve policy, US fiscal and banking sector developments, and overall market sentiment. However, macro risks such as rising US Treasury yields, stagflation risks, and a strengthening dollar index have accumulated, diminishing the allure of investing in risk assets like bitcoin.

US-based Spot Bitcoin Exchange-Traded Fund Expectations

Traders are focused on the leading cryptocurrency due to expectations for a US-based spot bitcoin exchange-traded fund (ETF). In contrast, ether has lost favor because of Ethereum’s declining revenue and renewed inflationary tokenomics. Nevertheless, investor interest in ether may revive later this year when the Ethereum Improvement Proposal (EIP) is implemented. This upgrade aims to reduce gas fees and increase transaction processing capabilities.

Understanding Bitcoin Implied Volatility

Bitcoin implied volatility is a measure of the expected fluctuations in bitcoin’s price over a specific period. This metric is derived from options prices and can provide insights into market sentiment and expectations of future price movements. A higher implied volatility suggests that traders anticipate larger price swings, while a lower implied volatility indicates expectations of more stable price movements.

Factors Affecting Bitcoin Implied Volatility

Several factors could contribute to the higher bitcoin implied volatility compared to ether. For instance, the anticipation of a bitcoin ETF in the US has generated significant attention from traders and investors. This increased focus could lead to higher price fluctuations as market participants react to news and developments related to the ETF.

Additionally, macroeconomic factors such as US Treasury yields, stagflation risks, and the dollar index could impact bitcoin’s price volatility. As a macro asset, bitcoin is more sensitive to these factors than ether, which is more focused on the Ethereum network’s development and upgrades.

Ether and the Ethereum Improvement Proposal

Although ether has experienced lower implied volatility than bitcoin in recent weeks, the upcoming Ethereum Improvement Proposal could change this trend. The EIP is expected to introduce significant changes to the Ethereum network, including reduced gas fees and increased transaction processing capabilities. These upgrades could attract renewed investor interest in ether, potentially leading to higher price volatility.


In conclusion, bitcoin implied volatility has been consistently higher than ether’s for the past 20 days, as shown by Deribit’s forward-looking 30-day implied volatility index. This trend is attributed to factors such as expectations for a US-based spot bitcoin ETF and macroeconomic risks affecting bitcoin as a macro asset. However, with the upcoming Ethereum Improvement Proposal, ether’s volatility may increase as investor interest is renewed. Market participants should closely monitor these developments to make informed decisions about their cryptocurrency investments.