Ether Experiences Massive Volatility Surge Amid Price Plummet

Ether’s Volatility Soars

Ether’s one-day at-the-money volatility surged to 184% from 34% amid a sharp decline in its price. This upheaval in volatility suggests that traders are increasingly seeking put options for downside protection.

The recent price drop saw Ether plunge as much as 24%, leading to significant market dislocations.
On Deribit, the price dipped to $2,065, while Kraken and Coinbase reported prices of $2,127 and $2,150, respectively.

Ether DVOL index. (TradingView, Deribit)

Market Dynamics

Observers noted that market makers contributed to the added volatility as they typically withdraw liquidity during such turbulent trading periods. Griffin Ardern explained that this behavior significantly influences options pricing.

Markus Thielen noted that delta hedging activities by these market makers added further pressure to Ether’s volatility spikes.

Underlying Economic Concerns

This volatility follows renewed trade tensions involving the U.S. and several key trading partners, which are raising fears of introducing inflation into the global economy—a situation that could restrict the Federal Reserve’s ability to lower interest rates. Consequently, major indices saw drops, with Dow futures declining by over 650 points.

Correction Note: Presto analyst Rick Maeda’s name was corrected.