Bitcoin's Dominance in Volatility Surpasses Ether for Unprecedented 20 Consecutive Days

Since September 7, the spread between Deribit, the prominent crypto options exchange, has consistently shown a negative value when comparing the forward-looking 30-day implied volatility index for both ether (ETH DVOL) and bitcoin (BTC DVOL). This marks the lengthiest period of such negative spread since Deribit introduced the DVOL indices in early 2021.

Bitcoin (BTC) continues to maintain its status as the largest and most liquid digital asset worldwide. Nevertheless, cryptocurrency traders are increasingly factoring in higher volatility for bitcoin in comparison to ether (ETH), which holds the position of the second-largest cryptocurrency by market value.

In an interesting turn of events, the spread briefly dipped into negative territory in March for the first time in nearly two years. This shift reflected the relatively higher richness of BTC IV. Subsequently, this trend has become commonplace, indicating that traders are presently less inclined to consider factors beyond macroeconomic concerns and are showing reduced interest in trading alternative cryptocurrencies.

The negative spread indicates that traders are suggesting a greater level of volatility in Bitcoin compared to Ether. (Amberdata) 

Since the crash induced by the coronavirus in March 2020, Bitcoin has transformed into a macro asset, consistently responding to cues from the Federal Reserve's policies, developments in the U.S. fiscal and banking sectors, and overall sentiment in traditional markets.

Recently, a slew of macro risks has surfaced, including the surge in U.S. Treasury yields, concerns about stagflation, a stronger dollar index, the ongoing threat of a U.S. government shutdown, and a growing likelihood of a deflationary crisis in China. All of these factors have dampened the allure of investing in risk assets, such as bitcoin.

Furthermore, the anticipation of a U.S.-based spot bitcoin exchange-traded fund continues to keep traders predominantly focused on the leading cryptocurrency. On the other hand, ether has experienced a decline in popularity, attributed to Ethereum's declining revenue and the resurgence of inflationary tokenomics.

Nevertheless, there might be a resurgence of investor interest in ether later in the year with the implementation of the Ethereum Improvement Proposal (EIP)-4844. This upgrade will introduce "proto-danksharding" to the Ethereum blockchain, aiming to reduce gas fees and enhance transaction efficiency.

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