A new report from crypto exchange Bybit and analytics firm Block Scholes highlights a significant divergence in options market volatility between Ethereum (ETH) and Bitcoin (BTC).
Divergence in Options Volatility
According to the report, the ETH-to-BTC implied volatility ratio for seven-day options surged past 2.0 by mid-May, marking its highest level since 2020. This indicates that traders were pricing ETH options with more than double the expected volatility of BTC, showcasing a surge in risk appetite and speculative positioning toward Ethereum.
Price Comparison of Ethereum and Bitcoin
Amid this divergence, Ethereum experienced a strong price rally, soaring over 23% intraday on May 8, while Bitcoin posted a more modest 10% gain during the same period. Nevertheless, ETH still trades more than 50% below its January 2025 peak, indicating that volatility is being driven more by short-term sentiment than a sustained recovery.
Trends in the Cryptocurrency Market
At the beginning of the month, the volatility ratio stood around 1.5 but sharply escalated as BTC's implied volatility dropped below the 35% threshold, a level it had maintained for 19 consecutive months. This breakdown marked a significant shift in Bitcoin's long-standing stability trend, while Ethereum's short-dated options remained persistently elevated. Realized volatility data also showed ETH consistently outpacing BTC across various durations, suggesting anticipated continued divergence between the two assets.
This divergence in volatility between Ethereum and Bitcoin signifies a broader trend that began in July 2024, reflecting Ethereum's increasing influence in driving crypto market volatility.
