Ether Volatility Surges Beyond 100% as Market Panic Unfolds
Ether (ETH) experienced a dramatic surge in volatility early Monday, with its DVOL index surpassing 100% as traders scrambled to hedge against mounting losses. The cryptocurrency plummeted by 24%, hitting multi-month lows as broader market fears gripped investors.
On Deribit, ETH briefly fell to $2,065, while Kraken and Coinbase saw lows of $2,127 and $2,150, respectively. CryptoQuant reported that this was Ether’s most severe single-day drop since May 2021, with a three-day decline of 23%, the steepest since November 2022. Meanwhile, Bitcoin (BTC) slipped just over 5% to $91,200.
Options Market Reacts as Put Demand Soars
As the sell-off intensified, traders rushed into put options for downside protection. Presto Research data showed that one-day at-the-money volatility spiked from 34% to 184%. Additionally, Deribit’s Ether DVOL index, which measures expected volatility over the next month, climbed from 67% to 101%.
“The surge in put options activity pushed the put-call ratio from 0.6 to over 2.5, signaling a significant shift toward bearish positioning,” explained Rick Maeda, an analyst at Presto Research.
Market Makers Withdraw Liquidity, Amplifying Chaos
The extreme price swings were exacerbated by market makers pulling liquidity. According to Griffin Ardern, head of options trading at BloFin, this behavior left order books thin, intensifying the volatility.
“Some market makers stepped back from providing liquidity due to the heightened risk, which contributed to larger price dislocations,” Ardern noted.
Meanwhile, Markus Thielen, head of 10x Research, highlighted that delta hedging activity fueled additional downside momentum. “As market makers rushed to rebalance, aggressive selling cascaded across the market, accelerating the sell-off,” he explained.
Macroeconomic Tensions Drive Risk-Off Sentiment
The downturn in ETH and the broader crypto market coincided with escalating trade tensions between the U.S. and its global partners. New tariffs imposed by the Trump administration on Canada, Mexico, and China rattled investors, raising fears of inflationary pressures and tighter monetary policy.
Traditional financial markets reacted sharply, with Dow futures plunging over 650 points and European stocks following suit. Meanwhile, the U.S. dollar gained strength as investors sought safe-haven assets.
With heightened geopolitical risks and macroeconomic uncertainty, traders anticipate continued volatility in Ether and other cryptocurrencies in the days ahead.
