Bitcoin Implied Volatility Drops After ‘Impressive’ Q1 Rally

Bitcoin and ether did well last quarter, but traders will be watching implied volatility for cues on when to make their next moves


MJgraphics/Shutterstock, modified by Blockworks


Bitcoin (BTC) and ether (ETH) finished the year’s first quarter well in the green — respectively by 68% and 49% — but volatility has calmed after practically traded sideways over the past two weeks.

Last month’s near-20% bitcoin rally had been sustained by bullish sentiment in the options market, digital asset unit BitOoda told Blockworks. 

Aggressive call spread buying across multiple expiration dates has been “encouraging,” the firm said. It also saw a recent drop in implied volatility of 4% for BTC and 3% for ETH, providing traders breathing room to either cover shorts or enter into a long volatility strategy.

But instability in the banking sector could pose a potential obstacle to lending conditions in the coming months, serving as an additional hindrance to the US economy. Some contend the US Federal Reserve implementing further rate hikes will likely continue to apply sell-side pressure.

Major benchmark indexes finished the week higher with the Dow up 3.2%, the S&P 500 up 3.5% and the Nasdaq higher at 3.4%. The CBOE Volatility Index (VIX), which is a measure of expected volatility over the upcoming 30 days, fell 14% to 18.7.

Bitcoin and ether outperformed last quarter, now close to recouping losses from the Terra collapse

Miguel Morel, CEO of Arkham Intelligence, told Blockworks “the further along the risk curve an asset is, the more the price tends to correct and the faster it corrects.” This happens because rate hikes alter the efficient frontier of investments, he said.

BlackRock is now predicting further rate increases which may trigger a period of greater volatility in the short term. 

All this while volumes continue to climb for digital asset investment products available to institutional and accredited investors. 

In March, their aggregate daily volumes jumped 57% to $380 million, per CryptoCompare, up 239% this year. (That figure includes vehicles that short digital assets such as bitcoin. These saw record inflows last quarter.)

Still, IntoTheBlock suggested traders may have taken profits in bitcoin last quarter, after centralized exchanges saw $4.1 billion BTC extracted from their platforms compared to just $633 million BTC flowing in.

Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the On the Margin newsletter.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.


Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Pack your bags, anon — we’re heading west! Join us in the beautiful Salt Lake City for the third installment of Permissionless. Come for the alpha, stay for the fresh air. Permissionless III promises unforgettable panels, killer networking opportunities, and mountains […]

recent research

Research Report Templates.png


ZKPs enable efficient offchain transaction processing and validation, resulting in increased throughput and reduced fees. Solana's ZK Compression leverages ZKPs to minimize onchain storage costs, while Sui's zkLogin streamlines user onboarding by replacing complex key management with familiar OAuth credentials.


The crypto asset manager lowered its planned fee from 0.25% to 0.15%, undercutting its competitors


Plus, a look at planned ETH ETF fees and how they differ from their BTC counterparts


North Korea suspected in breach of Indian exchange’s multisig wallet


Plus, Sanctum’s CLOUD token has officially launched — but not without problems


It’s not yet clear whether Donald Trump is pumping bitcoin. But an unofficial memecoin is still seeing benefit.