Bybit Report: ETH/BTC Implied Volatility Ratio Poised to Revert as Ethereum Rally Slows
Bybit’s August monthly report underscores shifts in cryptocurrency volatility dynamics, focusing on the ETH/BTC volatility ratio amid Ethereum’s cooling rally. Ethereum (ETH) surged 58% from $2,400 to nearly $4,000 between July and August 2025, pushing the ETH/BTC at-the-money (ATM) implied volatility ratio from 1.63 to 2.2. Meanwhile, Bitcoin’s (BTC) 30-day ATM implied volatility held near historical lows. This divergence in cryptocurrency volatility indicates traders anticipate fewer price swings in Bitcoin and are drawn to Ethereum’s higher volatility. The report predicts that as Ethereum’s performance slows, the ETH/BTC implied volatility ratio may gradually revert to historical levels. For traders, tracking this volatility ratio offers key insights for strategy and risk management in a shifting volatility landscape.
Neutral
The report signals a normalization of the ETH/BTC implied volatility ratio following an outsized rally in Ethereum. Historically, periods of sharp divergence in volatility ratios—such as after major ETH price spikes—tend to revert as market participants recalibrate risk premiums. In the short term, traders may reduce directional bets on ETH volatility and shift into more balanced strategies, leading to lower volatility trading volumes. Over the long term, a gradual reversion of the ETH/BTC volatility ratio could stabilize hedging costs and narrow volatility-based spreads between the two largest crypto assets. This pattern mirrors past episodes, like post-2021 ETH surges, where implied volatility discrepancies normalized as investor focus returned to fundamentals. Overall, the news points to a measured volatility landscape rather than a directional price driver, warranting a neutral market impact assessment.