The silence that traders are pricing in — Bitcoin and Ether's volatility drops rapidly

Despite the market being filled with disturbing news, traders are anticipating a surprisingly calm market turn. Bitcoin and Ethereum’s 30-day implied volatility index has plummeted to its lowest level in months, and its future is expected to be surprisingly stable.

This decline in volatility indicates that short-term risks are rather mitigating, despite uncertainties such as geopolitical tensions and slowing inflows into Bitcoin spot ETFs. Changes in traders’ buying and selling trends and strategies have revealed the depth of market sentiment.

Volatility Index Plunge and Trader Judgment

Data source BTC’s DVOL index provided by Deribit fell to 40% from 59% at the beginning of the fourth quarter, hitting its lowest level in months. Similarly, Volmex’s BTC Volatility Index (BVI) has also shown a significant decline, a trend that can be seen on Ethereum.

The ETH DVOL index fell below 60%, the lowest level since mid-2024. The plunge from last fall’s peak of 80.38 speaks of a dramatic shift in market sentiment.

The Implied Volatility Index is an indicator of how much investors expect future price movements. A decrease in this number means that traders believe that the market will calm down in the coming days and there will be few major movements. On the other hand, if it rises, it means that violent price movements are expected.

The downward trend in volatility suggests that the surge in option buying and hedge buying seen in October and November has come to an end. Traders shifted towards more rational pricing and began to soften their risk management stance.

Traders’ Strategy Shifts Reflected by the Options Market

According to the analysis of Markus Thielen, founder of 10x Research, the movements in the options market clearly indicate a shift in traders’ strategies.

“From an options market perspective, this compression reflects reduced short-term uncertainty and greater likelihood of consolidation than larger directional movements,” Thielen noted. Traders are moving to eliminate hedging strategies and are developing volatility trading using range markets.

Last week’s market was dominated by traders selling both call options (the right to expect an upside) and put options (the right to expect a decline) in Deribit. Options are derivative contracts that give you the right to buy or sell a crypto asset at a predetermined price in the future.

“Options trading over the past week has been primarily focused on call and put selling, indicating that the majority of notional amounts traded are related to volatility selling strategies rather than pure directional bets,” Thielen said.

This means that traders are focusing on strategies to profit from lower volatility and rather avoid major market movements. This is also evidence that speculative positions are rapidly rewinding.

Ethereum’s risk perception is changing rapidly

There has been a significant shift in Ethereum’s risk perception of Bitcoin. The spread between the 30-day implied volatility index between the two companies fell to 16 last week, the lowest level since early spring 2025. The change is dramatic, as it peaked above 30 last summer.

This narrowing spread indicates that traders are more willing to dissolve hedging trades in Ethereum’s native token. The phenomenon of the narrowing volatility gap between Ethereum and Bitcoin is not just a fluctuation in technical indicators, but also means that the relative risk felt by traders is actually decreasing.

“The faster pace of Ethereum’s volatility decline suggests that speculative or event-driven positioning is being dissolved more aggressively, reinforcing the broader signal that short-term tail risks (extreme price volatility risks) are easing rather than increasing,” Thielen said.

Ether-Bitcoin volatility spreads remain positive, indicating that traders expect ETH’s price to fluctuate slightly more than Bitcoin. This means that while both are expected to be stable, Ethereum is considered to have a slightly larger range of volatility.

Trader Sentiment of Dogecoin and the Market as a Whole

During Bitcoin’s decline, Dogecoin also recorded a decline of approximately 7.80%, with smaller stocks lagging behind larger cryptocurrencies. As of January 29, 2026, Dogecoin is trading around $0.12.

The token was accompanied by significant trading volume, breaking below the crucial support line of $0.1218. Therefore, after a temporary rebound from around $0.115, the level has turned into a short-term resistance level.

Traders are closely watching the $0.115~$0.12 zone as a key judgment zone, with the maintenance and recovery of this level suggesting market stabilization. On the other hand, a decline below $0.115 is expected to fall to $0.108~$0.10.

Overall, traders’ market views have clearly shifted towards a “calm-oriented” one. Multiple signals, such as declining volatility, the penetration of options selling strategies, and the acceleration of hedge removal, point in the same direction. Despite geopolitical risks and uncertainties such as slowing ETF demand, the consensus among market participants is that the situation will be relatively calm from here.