Ethereum volatility outpaces Bitcoin ahead of US election

Ethereum’s (CRYPTO:ETH) implied volatility has surged past Bitcoin's (CRYPTO:BTC) as the November U.S. election approaches, according to Nick Forster, founder of DeFi derivatives protocol Derive.

Traders are bracing for significant movement, with Ethereum’s 30-day at-the-money contracts showing nearly a 7% higher volatility than Bitcoin.

This increased volatility reflects uncertainty tied to potential decentralized finance regulations in the U.S.

Ethereum, the second-largest cryptocurrency by market capitalization, is crucial for smart contracts and decentralized finance (DeFi) applications.

The volatility gap between Ethereum and Bitcoin has widened as forward volatility readings indicate a notable spike between October 25 and November 8, a period where traders expect significant price movement.

Ethereum’s forward volatility is currently 76.6%, compared to Bitcoin's 69.8%, indicating Ethereum's greater sensitivity to external factors.

Forster explained that “Ethereum’s heightened volatility is a direct reflection of traders’ expectations for increased uncertainty, especially as we approach the election.”

He also noted that both Bitcoin and Ethereum are near neutral in market skew, though Bitcoin has started to diverge slightly, reflecting mild bullish sentiment.

As the election draws closer, several macro events and tailwinds are expected to impact the market, including the political positions of U.S. presidential candidates.

Both Vice President Kamala Harris and former President Donald Trump have shown interest in the crypto sector.

Trump is viewed more favorably within the crypto community for potentially providing clearer regulatory frameworks, while Harris has made public statements, though her stance on policy remains vague.

According to a spokesperson from CryptoQuant, Bitcoin’s favorable seasonality during Q4 could see its price target between $85,000 to $100,000.

However, the volatile market and upcoming election make it a crucial period for both Bitcoin and Ethereum.

At the time of reporting, the Ethereum price was $2,398.68, while the Bitcoin price was $61,351.75.