Research Summary
The research report discusses the volatility trends in the crypto market, particularly focusing on Bitcoin (BTC) and Ethereum (ETH). It notes that implied volatility has broken its months-long downwards trend due to recent positive sentiment in the market. Despite strong performance by both BTC and ETH in 2023, their volatility smiles continue to price up- and down-side protection at similar levels. The report also highlights that ETH’s implied volatility has fallen below that of BTC, marking the longest such period observed.
Actionable Insights
- Monitor the volatility trends: The report suggests that the volatility trends in the crypto market have changed, with implied volatility breaking its downwards trend. This could have implications for trading strategies and risk management.
- Observe the performance of BTC and ETH: Despite strong performance by both BTC and ETH, their volatility smiles continue to price up- and down-side protection at similar levels. This could influence decisions on options trading.
- Consider the implications of ETH’s lower implied volatility: ETH’s implied volatility has fallen below that of BTC for the longest period observed. This could impact the relative attractiveness of ETH and BTC options.
