The cryptocurrency market is experiencing heightened volatility this week, and a lot of this stems from the general correlation between US equities and crypto. As US markets experience significant swings, crypto tends to follow suit, amplifying the impact.
With the heightened uncertainty across traditional markets, including less optimism on the Fed’s near-term policy, we’ve seen more traders hedging their positions with puts, which is contributing to increased volatility.
BTC dropped 6.5%, falling from $105K to $98K. During this period, 1-day BTC ATM implied volatility (IV) spiked from 52% to 76%, indicating heightened demand for put options to hedge downside risk.
Traders adjusting to rising uncertainty in US economy
The probability of BTC falling below $75K by the end of Q1 (March 28) has risen to 9.2%, up from 7.2% in the last 24 hours, according to analysis from Derive.xyz, a decentralised onchain options platform for crypto traders. This reflects a shift in market sentiment towards bearishness as traders adjust to rising uncertainty.
ETH also saw a 9% drop, sliding from $3330 to $3030 in the past 24 hours. ETH’s 1-day ATM IV surged from 67% to 93%, with traders looking to hedge their positions amid the market shake-up.
Despite the short-term downturn, long-term (180-day) ETH 25 delta skew remains positive at +8%, signaling that traders continue to hold bullish expectations in the medium-to-long term. This could be driven by upcoming upgrades like Pectra (March) and Ethrealize, which will streamline Ethereum’s interface with traditional finance.
“Looking at BTC and ETH, the market seems to be reassessing its positioning for 2025,” said Sean Dawson, head of cryptocurrency research at Derive.xyz. “While there’s still bullish sentiment in the long-term for ETH, particularly driven by anticipated network upgrades, we’re seeing short-term volatility as a direct reflection of increased hedging activity and shifting sentiment across both markets.”
Dawson said that the large inflows into options and the overall rise in volatility suggest that traders expect market conditions to remain unpredictable in the short-term. But longer-term, the sentiment is holding steady, with calls still dominating the market for ETH despite the recent pullback.
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Given the close market correlation with US equities, the next couple of months will likely remain volatile, as investors digest broader macroeconomic factors alongside crypto’s evolving narrative. Volatility remains a key theme for both BTC and ETH in the immediate future.
Why is DeepSeek affecting cryptocurrency prices?
While the narrative has dragged Bitcoin lower alongside equities, some investors are arguing that Bitcoin’s core value proposition sets it apart from these sectors. Unlike tech stocks, Bitcoin isn’t beholden to the performance of any one company or nation. It’s decentralized, borderless, and finite — an asset uniquely positioned to thrive in a world increasingly shaped by geopolitical tensions and technological disruption.
The rise of DeepSeek is more than a corporate success story — it’s a signal of the shifting global balance of power in frontier technologies. As the US and China jostle for dominance, the uncertainty has made markets more fragile.
But the fact remains that a correlation between crypto prices and US tech stocks has emerged over the last 24 hours. NVIDIA was already flying too high as things stood, so a correction was bound to occur at some point. What is more surprising is that this has translated into a temporary sell-off in key cryptocurrency prices. There is little logic to this, and we anticipate this will create a buying opportunity for investors if it continues.
