Bitcoin and Ether have turned to "silence", and traders' expectations have turned the other way around.

Currently, BTC/ETH traders are increasingly anticipating market calm. The rapid decline in the implied volatility (IV) index illustrates this sentiment, and as of the end of January 2026, the trend of calming down continues. Despite geopolitical tensions and limited inflows into Bitcoin ETFs, traders are looking the other way around, rather shifting towards near-term risk mitigation.

Volatility Index Reaches Multi-Month Low, Signaling Market Calm

Bitcoin’s 30-day implied volatility (DVOL index), as measured by Deribit, is currently down to the 40% level, maintaining its lowest level in several months. This represents a significant contraction from its previous peak of 59% in November. Similarly, the Bitcoin Volatility Index (BVI) offered by Volmex also reflects a notable decline in expected volatility.

The same trend is observed for Ethereum. ETH DVOL is hovering below 60%, which is the lowest level in the past few months. It is a significant pullback from the peak of 80.38 recorded in November.

This volatility compression phenomenon means that market participants are no longer actively rushing into options or hedging purchases. This means that although the slowdown in demand for spot Bitcoin ETFs listed in the United States and the bullish dollar index are causing downward pressure, traders expect a more stable market environment and a less risky market in the future.

Changes in the options market tell the story of trader psychology, hedging elimination accelerates

Commenting on this market shift, Markus Thielen, founder of 10x Research, said: “From an options market perspective, this compression reflects reduced short-term uncertainty and greater potential for consolidation than larger directional movements.”

Thielen added: “Traders appear to be unhedging and supplying volatility through range-based strategies, which is consistent with the declining demand for protection for proximity expirations.”

In fact, in options trading over the past week, there has been a growing trend of both call and put options being sold on Deribit. This suggests that the majority of the notional amount traded is related to volatility selling strategies rather than pure directional bets, indicating that traders are looking to profit from the reduced range of market movements.

Ethereum’s risk perception declines rapidly, and its volatility relative to BTC is also shrinking.

Ethereum’s risk perception of Bitcoin has declined significantly. This indicates that traders are more willing to dissolve hedging in Ethereum’s native token.

The spread on the BTC-ETH 30-day implied volatility index narrowed to the 16 level last week, reaching its lowest level in several months. It had reached a previous peak of over 30 in August 2025, but the subsequent rewind is progressing rapidly.

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

However, the volatility spread of Ether-Bitcoin remains positive, reflecting that traders expect ETH’s price to fluctuate slightly more than Bitcoin. This means that while both assets are expected to settle down overall, Ether is believed to leave some room for volatility, and vice versa, as the market’s view is based on a delicate balance.

The market is moving towards “calming”, and short-term tail risks are easing.

Bitcoin is currently trading at the $85.32K level, marking a -4.89% drop in 24 hours. Ethereum is also down -5.57% in 24 hours, indicating simultaneous selling pressure on both assets.

However, the downward trend in the volatility index indicates that traders do not believe that this short-term price correction will trigger significant volatility. Rather, the market as a whole is interpreted as heading towards a phase of “consolidation and calming”, creating a situation where we are cautious about waiting for a breakout from the sideways rather than a major directional move.

The current situation where traders are leaning towards volatility selling strategies, rejecting geopolitical risks and bullish volatility theories based on U.S. economic indicators, symbolizes a significant shift in market sentiment. Short-term tail risks tend to ease, and the market is also adapting to a calmer environment.