March Crypto Madness? Bitcoin and ETH Showed Increased Volatility
The implied volatility (IV) for Bitcoin (BTC) and Ethereum (ETH) has witnessed a considerable rise for March, which suggests that traders are pricing in greater levels of uncertainty and the possibility of price swings for both cryptocurrencies in the next month.
According to information from Skew Analytics, the March term IV for BTC increased to 82%, while the March term IV for ETH skyrocketed to 94%. These figures show considerable rises compared to the 30-day moving averages for each cryptocurrency.
Implied volatility unchanged: crypto markets stable
At the same time, the weekly term implied volatility (IV) for BTC and ETH stayed unchanged, indicating that traders do not anticipate urgent triggers for substantial price moves soon.
Concerns have been raised among crypto investors due to the diverging patterns in IV for BTC and ETH; these investors are being asked to maintain vigilance regarding the markets.
Since there have been no major macroeconomic events this week and no breaking news in the cryptocurrency field, it still needs to be clarified what is behind the spike in March term IV prices for BTC and ETH. On the other hand, some experts think that the forthcoming update to Ethereum Improvement Proposal (EIP) 1559, which attempts to cut the transaction costs on the network, might be a possible trigger for heightened volatility in the following month.
Bitcoin’s rise, market uncertainty grows
Others hypothesize that the recent spike in institutional adoption of Bitcoin and the rising acceptance of cryptocurrencies by conventional financial institutions might be another reason driving the more significant uncertainty in the market.
Regardless of what caused the price drop, the event highlights how important it is to follow market trends and be updated about any changes that may influence crypto values.
As a result of the sharp increase in March term IV, several investors have adopted a cautious stance in reaction to the situation. These investors have chosen to hedge their holdings or minimize their exposure to crypto assets until the market stabilizes.
On the other hand, some are adopting a more positive stance, seeing the heightened volatility as a chance to profit on anticipated price moves in the market.
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