Option Market Data Shows Traders are Hedging Against Potential Downside Risk, ETH Volatility to Increase Further

BlockBeats News, January 15th, according to The Block, as Donald Trump prepares to hold his second inauguration on January 20th, the Bitcoin derivatives market is showing an increased expectation of volatility.

Derive.xyz, a derivatives trading platform, data suggests a bearish outlook for the medium term. Bitcoin put options have increased to 40% of all open interest on Derive.xyz, a significant rise in the past week. Sean Dawson, Derive.xyz's Head of Research, states that this indicates traders are hedging against potential downside risk as Trump's inauguration approaches.

Bitcoin's implied volatility continues to rise, highlighting market uncertainty. Over the past week, Bitcoin's 7-day IV rose by 3% to 56.5%, while its 30-day IV increased by 1.5% to 57.5%. Sean Dawson notes that these trends suggest an increasing expectation of significant price swings in the days leading up to the inauguration.

Ethereum traders have an even stronger expectation of volatility. In the past 24 hours, Ethereum's 7-day IV surged by 6% to 74%, while its 30-day IV rose by 2.5% to 69.5%. Dawson explains, "This difference indicates that Ethereum traders anticipate greater short-term volatility, possibly because Ethereum is more sensitive to macroeconomic changes and post-inauguration policy speculation, preparing for more intense short-term volatility compared to BTC."