The cryptocurrency community focused yesterday (23 July) on the evening launch of the ETH Spot ETF. Prior to this, the options market had already priced in significant uncertainty, resulting in a severely inverted volatility term structure for ETH, peaking before the previous day’s settlement. Fluctuations were noted in coin prices around the launch of the ETF, with market participants vigorously expressing their views. According to data from Farside Investors, products from Grayscale experienced substantial redemptions, similar to the BTC ETF scenario. Investors likely sought to cash out profits or simply shift to lower-fee products. However, new offerings from Blackrock, Bitwise, and Fidelity attracted many buyers right at launch, offsetting the capital outflow from Grayscale’s ETF, mitigating some negative sentiment, and leading to only a slight decline in ETH by the end of the day.

Source: Farside Investors

Source: TradingView

Source: Deribit （As of 24 JUL 8: 00 UTC）

Reviewing the overall trend yesterday, ETH’s Realized Volatility could not sustain the high Implied Volatility levels of up to 80%. After 10 AM, ETH volatility began a steep decline, returning to around 60+% levels. Trading over the past 24 hours was predominantly characterized by selling volatility, mainly concentrated in options expiring within a month.

Source: SignalPlus, After the ETF launch, the IV continuously declined.

Data Source：Deribit Overall Distribution of ETH Tradings

For BTC, the Implied Volatility term structure also followed a similar trend to ETH’s, as uncertainties around the ETH ETF dissipated. However, the sharp drop in front-end IV further highlighted the high Volatility Premium implied by 2 August. As previously mentioned, the market is eagerly anticipating the 2024 Bitcoin Summit. If presidential candidate Donald Trump actually proposes to increase Bitcoin’s role in the U.S. economic reserves at the summit, it would likely trigger a bullish frenzy. Indeed, trading activity over the past 24 hours shows a significant Risky Flow for 2 August 2024, with notable purchases of 74000/76000 Calls and sales of 66000 Puts, maintaining a high Volatility Skew of around 5% for BTC in the mid to back end.

Source：SignalPlus, Starting from 2 August, BTC’s Volatility Skew has significantly shifted towards call options.

Data Source: Deribit，Overall Distribution of ETH Trading；2 AUG 24 Distribution of Trading

Source: Deribit Block Trade

Source: Deribit Block Trade