Ethereum Put Demand Jumps as Downside Fears Grow; Bitcoin Shows Relative Strength
Summary
- Analysts said rising put options demand and higher implied volatility in the Ethereum options market show growing concern over downside risk.
- By contrast, Bitcoin is holding up relatively well, staying in the $80,000 to $84,000 range with implied volatility at 33%.
- The report said investor anxiety is rising as concerns over AI investment in U.S. stocks fuel broader risk aversion, and that markets need to watch whether that leads to an actual wave of selling.
Forecast Trend Report by Period
Demand for protection against price declines is rising quickly in the Ethereum options market, while Bitcoin is holding up relatively well despite broader weakness in risk assets.
CryptoBriefing reported on October 19, citing Block Scholes data, that implied volatility on seven-day Ethereum put options traded as much as 8 percentage points above call options over the weekend. Because put options are typically used to hedge against falling prices, the gap suggests investors are becoming more cautious about downside risk.
Seven-day implied volatility for Ethereum has also risen by about 10 percentage points recently. Over the same period, Bitcoin's implied volatility increased to 33% from below 30% last Friday.
The divergence is also evident in spot prices. Ethereum has fallen about 8% over the past 30 days, while Bitcoin has gained 1.5%.
Thahbib Rahman, a research analyst at Block Scholes, said demand for short-dated put options in both Bitcoin and Ethereum has strengthened since early October. The push to hedge against downside risk has been more pronounced in Ethereum.
Risk aversion has also been spreading across U.S. equities as concerns mount over investment in artificial intelligence. Semiconductor stocks have fallen about 20% over the past two weeks, while the Nasdaq 100 posted its worst weekly performance since the tariff shock in April last year.
"Investor anxiety is becoming increasingly clear," Rahman said. Markets now need to watch whether instability in equities develops into an outright wave of selling.
