Subdued Volatility Expectations Suggest Traders Relaxed About Bitcoin, Ethereum Price Risks

cryptonews.com:

Despite the recent pullback in cryptocurrency markets from multi-month highs hit earlier this month, options markets suggest that traders still have relatively subdued volatility expectations. Deribit’s Bitcoin and Ethereum Volatility Indices both remain close to record lows, according to data provided by The Block going back one year.

The recent pullback in crypto prices that has seen Bitcoin fall back into the mid-$21,000s from earlier annual highs above $24,000 and Ethereum fall under $1,500 from earlier annual highs above $1,700 has been caused by a combination of 1) worries about a more restrictive US interest rate outlook in wake of recent hawkish Fed communications and stronger than expected US data and 2) concerns about a US regulatory crackdown on large US-based crypto firms.

Deribit’s Bitcoin Volatility Index was at 48 on Monday, not far above the record lows it printed last month at 42 and well below mid-January highs of 73. Deribit’s Ethereum Volatility Index, meanwhile, was last at 62, just above its early January record lows around 58 and down sharply from recent mid-January highs above 80. Deribit is the dominant cryptocurrency derivatives exchange, accounting for around 95% of open interest across all Bitcoin and Ethereum derivative markets.

Despite looming US Consumer Price Index and Retail Sales data this week that could simultaneously inform expectations for the Fed’s tightening outlook and the outlook for a potential US recession later this year, Bitcoin’s 7-day Implied Volatility according to At-The-Money (ATM) options markets fell to 39.68% on Monday, its lowest in more than a month.

That’s despite warnings from macro strategists that this week’s upcoming data could really shake things up for crypto,