A significant drop in the implied volatility (IV) of at-the-money options for Bitcoin and Ethereum indicates a waning confidence in potential price increases, according to trader Gordon Grant, as reported by The Block.
According to the dashboard, the relevant metric for weekly and monthly contracts linked to the second-largest cryptocurrency by market capitalization has plummeted from over 88% to approximately 60%. The IV for at-the-money Bitcoin options for the same expiration ranges has fallen from 77% to less than 51%.
Grant noted that option sellers, both before and after the halving, are losing hope for a price increase in Bitcoin, at least in the near future.
“The term structure of volatility and skew remains relatively steep, both due to the aforementioned dynamics and the potential for a resurgence of dispersion in the second half of the year and in 2025,” the expert added.
In other words, the options market’s assessment implies a much lower strike price—participants now equally consider Bitcoin reaching $75,000 by the end of the year and $100,000 compared to a rate above $73,000 in March.
According to Grant, investors missed the opportunity to sell coins before the halving, losing the chance to profit.
“Hodlers were late to capitalize on cyclically high volatility before the event and rushed to exit due to fat premiums. As a result, the same December options with a $100,000 expiration have dropped from a 20% premium over spot to a 10% discount,” he added.
On May 1, the price of the leading cryptocurrency fell below the $57,000 level.
Earlier, Glassnode concluded that Bitcoin is currently forming a floor in the $60,000–66,700 range. A sustained break below could trigger a cascade of panic, prompting a rush to establish a new equilibrium, they warned.