The options market is signaling an impending change in the market focus – from bitcoin to relatively undervalued ether and other alternative cryptocurrencies.
The spread between the six-month implied volatility (IV) for ether and bitcoin – a measure of the expected relative price volatility between the two – has risen to a record high of 46%. That surpasses the previous peak of 45% seen on Feb. 21, 2020, according to data provider Skew. The three- and six-month spreads have risen to an 11-month high of 32% and 23%, respectively.
The widening of the IV spreads indicates that the market expects ether and other alternative coins to chart bigger percentage moves than bitcoin in the near term.
“Traders are expecting increased volatility for ether relative to bitcoin,” Skew CEO Emmanuel Goh told CoinDesk. “This is consistent with decreasing correlation and a pick-up in interest across alternative cryptocurrencies.”