DUBAI, UAE, June 17, 2025 — , the world’s second largest crypto exchange based on trading volume, has published a new report in partnership with Block Scholes. The report highlights a significant divergence in volatility between Ethereum (ETH) and Bitcoin (BTC) that occurred in May 2025.
Key Highlights:
- During May 2025, ETH options showed historically high volatility premiums compared to BTC, resulting from ETH’s increased realized volatility during a notable price surge.
- The ratio of ETH-to-BTC implied volatility for short-term options exceeded 2x, reaching its highest point in almost five years.
- BTC’s realized volatility decreased below a consistent 35% level, breaking a trend that had lasted 19 months.
- ETH’s volatility term structure consistently displayed inversion, with options expiring sooner showing higher volatility than those expiring later.
- The divergence in implied volatility aligned with ETH’s strong performance, including a 23% increase within a day amidst significant market events.
ETH-to-BTC Implied Volatility Expands to Five-Year High
In May 2025, a clear separation in implied volatility became apparent between ETH and BTC options. Implied volatility indicates the market’s anticipation of future price fluctuations during an option’s term. At the beginning of the month, the ETH-to-BTC implied volatility ratio for 7-day options was around 1.5, suggesting that ETH options were priced with an expected volatility 50% higher than BTC options.
By May 16, the ratio had risen above 2x, hitting a high not seen since 2020, as BTC’s implied volatility fell to its lowest levels since October 2023. This decline in BTC volatility broke through the 35% floor that had been in place for over 19 months, while ETH’s short-term implied volatility remained high, although slightly below its May 10 peak. The difference in volatility was especially noticeable in the 30-day term, reaching its widest gap since mid-2022.
Realized Volatility Trends Underscore the Divergence
The substantial difference in implied volatility was supported by trends in realized volatility, which measures actual historical price changes. In May, ETH’s realized volatility significantly exceeded BTC’s across various terms, increasing expectations for continued divergence between the two assets.
On May 15, the 7-day realized volatility ratio between ETH and BTC reached its peak, closely followed by the implied volatility ratio, suggesting that market participants anticipated ETH’s higher volatility would continue. This trend is not new; the ETH-BTC volatility ratio has been steadily increasing since July 2024, during both bull markets and times of market instability.
ETH’s strong performance in May was driven by several factors, including positive trade news from the US and UK. ETH jumped by over 23% on May 8 alone and continued to outperform BTC, which increased by about 10% during the same period. Despite this upward movement, ETH remained more than 50% below its peak in January 2025 and its all-time high.
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