$ETH Options Market Increases Ahead of Ethereum ETFs Launch

The imminent launch of Ethereum (ETH) exchange-traded funds (ETFs) has led to a surge in hedging activity among investors. This trend is reflected in ETH's persistent volatility premium over Bitcoin (BTC), as investors turn to the options market to mitigate potential price fluctuations.

Data from Deribit and Kaiko show that demand for options, which protect against price volatility, has risen. Call options hedge against price increases, while put options guard against price declines. The uptick in hedging is especially notable in short-term contracts.

For instance, implied volatility for options expiring on July 19 jumped from 53% on Saturday to 62% on Monday, surpassing that of contracts expiring on July 26. Kaiko analysts noted that this spike indicates investors' willingness to pay more to hedge against short-term price movements, reflecting a heightened level of uncertainty.

Additionally, investors anticipate greater volatility in Ethereum compared to Bitcoin. Amberdata reveals that since late May, the 30-day forecast volatility indices for Ethereum and Bitcoin on Deribit (ETH DVOL and BTC DVOL) have shown a consistent 10% differential, up from an average of 5% in the first quarter.

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