As the halving event approaches, Bitcoin’s volatility surpasses that of Ether.

Bitcoin’s annualized 30-day historical or realized volatility surged to nearly 60% last week, surpassing that of Ether by nearly 10 percentage points.

Data from Kaiko shows that the spread between Bitcoin and Ether’s annualized 30-day historical volatility reached its highest level in at least a year. This increase in volatility seems to have been catalyzed by inflows into spot ETFs and the impending halving event in the Bitcoin blockchain.

Bitcoin, known for its relatively steady performance compared to other cryptocurrencies, has recently exhibited higher volatility than Ether. Its annualized 30-day historical volatility reached close to 60%, surpassing Ether’s by nearly 10 percentage points. This represents the widest spread observed in at least a year, as per data from Kaiko. Historical volatility measures the degree of price turbulence over a specific period.

The reversal in the Bitcoin-Ether volatility spread occurred following the approval by the U.S. Securities and Exchange Commission (SEC) of nearly a dozen spot Bitcoin exchange-traded funds (ETFs). This allowed traders to gain exposure to Bitcoin without owning it directly. Subsequently, traders have closely monitored the activity in spot ETFs, with net inflows contributing to upside volatility in Bitcoin and the broader cryptocurrency market. Meanwhile, the decreasing likelihood of the SEC approving an Ether ETF by May has dampened sentiment among Ether traders.

Another factor contributing to the heightened volatility in Bitcoin is the upcoming reward halving in the Bitcoin blockchain. Scheduled for April 21, this event will reduce the per-block reward paid to miners by 50%, from 6.25 BTC to 3.125 BTC. Historically, halving events have been viewed as bullish for Bitcoin, as they reduce the rate of supply expansion, potentially leading to a supply-demand imbalance favoring price appreciation. However, Bitcoin has already surpassed its previous bull market peak of around $69,000 weeks ahead of the halving, adding to the anticipation surrounding the event for traders.

Greg Magadini, director of derivatives at Amberdata, suggests that the bullish positioning ahead of the halving event may result in a “sell-the-news” pullback afterward. He highlights the extended nature of the current market positioning, which could lead to liquidations of excessive futures open interest, changes in volatility skew, and a collapsing basis.

Magadini also points out that Bitcoin’s options market is pricing in the halving event, with a steep implied volatility contango before April 26 and a high forward volatility kink for the April 26 expiration. Implied volatility represents the market’s expectation of future realized volatility and is typically plotted as an upward-sloping curve known as a contango.