In May 2025, a report from Bybit and Block Scholes recorded a significant divergence in volatility between Ethereum and Bitcoin. This phenomenon is linked to shifts in market conditions and price trends.
Report Summary
In the volatility report released by Bybit, it was noted that in May 2025, ETH options exhibited historically high volatility premiums over BTC, driven by ETH's elevated realized volatility during a major price rally.
ETH Volatility Surge
At the beginning of May, the ETH-to-BTC implied volatility ratio for short-dated options hovered around 1.5, indicating that ETH options were priced with 50% higher expected volatility than BTC options. By May 16, the ratio climbed above 2, reaching a peak not seen since 2020.
Realized Volatility Trends
In May, ETH's realized volatility significantly outpaced BTC's, reinforcing expectations for continued divergence between the two assets. On May 15, the 7-day realized volatility ratio between ETH and BTC peaked, indicating market participants expected ETH's higher volatility to persist.
The investigation of ETH and BTC volatility in May 2025 highlights significant changes in the cryptocurrency market, which may have long-term implications for investors and traders.
