Block Scholes x Bybit June Volatility Review

Key Insights

• BTC volatility has reached historically low levels against ETH and SOL: In June, BTC implied volatility fell to 28% and 7-day realised vol to 22–25 %, extending a multi-year down-trend despite sizable macro shocks (geopolitical strikes, policy feuds, first US stable-coin law). 

• BTC’s low volatility ratio to other assets coincides with the launch of spot ETFs in the US: The current regime, beginning after the January 2024 spot-ETF launch, shows smaller and rarer volatility spikes versus prior cycles.

• ETF activity may be acting as a marginal buyer of BTC: A skewed distribution of returns in 2025 shows a higher proportion of small, positive daily returns. Net inflows to ETFs may be suppressing the realized volatility of BTC, with a new pool of institutional demand acting as a marginal buyer in a sell-off and a “stickier” source of demand. 

• ETH ETFs lower proportional inflows may limit the effect on ETH: Despite the launch of several ETH spot ETFs in the US in , we do not see the same impact on ETH volatility. This may be partly explained by the far lower buying activity of its ETFs, which have consistently traded a smaller proportion of ETH’s daily trade volume compared to BTC ETFs.

Introduction

Unlike other months since President Donald Trump’s inauguration, the month of June was an ice-cold reminder that trade policy uncertainty is not the only driver of crypto price action. 

June was characterized by more than one high profile public feud – first, President Trump and Tesla CEO Elon Musk took to social media to attack one another over Trump’s “big, beautiful bill” – a bill which Musk claimed would “cause a recession in the second half of this year”. That feud saw BTC spot price fall towards $100K, monthly low. The second feud was a continuation of Trump’s criticism of Chair Powell of the Federal Reserve, who the President stated has “a low IQ for what he does”.

June also saw a significant escalation in Middle East tensions as President Trump confirmed US strikes on three key Iranian nuclear facilities. Iran retaliated with strikes on a key US military base in Qatar, before a fragile ceasefire was brokered by Trump. Finally, towards the end of June, the first stablecoin legislation in the US, the GENIUS Act, was passed through the Senate. 

Figure 1. BTC spot price (orange, left-hand axis) and ETH spot price (purple, right-hand axis). Source: Block Scholes

However, despite numerous, significant macro and geopolitical developments, BTC implied volatility continued to grind lower throughout most of the month, even finding a floor as low as 28%. In this month's volatility review, we aim to examine a broader trend of lower Bitcoin realized and implied volatility, and explore whether the entry of institutional buyers of the largest cryptocurrency may have contributed to the asset’s suppressed volatility levels. 

How low is too low?

Implied volatility, a measure of market participants' expectation of the level of volatility delivered by the underlying asset over some period of time (7 days, 14 days, 30 days and 90 days), has generally been on a downtrend since 2020. In previous volatility reports, we have speculated on the growing maturity of Bitcoin as an asset as the cause.

However, as showcased in the chart below, BTC implied volatility has now fallen to levels that, relative to its history, are quite extreme. Volatility levels for short-tenor expiries below 30% have been a rare and unique phenomena since 2020, and in the month of June, the implied volatility for a 7-day BTC option fell below that threshold – to a low of 28% – a level last seen on Oct 20, 2023. 

Figure 2. BTC at-the-money options’ implied volatility at several constant tenors. Source: Block Scholes

Realized, or delivered volatility goes some way in explaining the lower level of implied volatility. This backward looking metric quantifies the volatility actually delivered by spot price returns over a lookback window and, as seen below, shows that BTC is indeed moving at historically low levels. At the tail-end of June, the 7-day estimate of realized volatility fell below 25% and has fallen as low as 22%. As with implied volatility, the last time realized volatility fell below its 20-month held level of 25% was in October 2023. 

Figure 3. BTC realized volatility (60-minute returns across 7-, 14-, 30- and 90-day lookback windows). Source: Block Scholes

While looking at the implied volatility of several constant tenors for BTC or the realized volatility of spot price returns does suggest a low level of volatility relative to our five-year history, we can also look at the relative ratios of BTC realized volatility compared to that of ETH or SOL. This helps us understand whether the decline in BTC volatility is something unique to BTC alone – or whether the crypto asset class in general is experiencing lower levels of volatility. 

The result is certainly the former: the ratio of ETH realized volatility relative to BTC volatility over the past seven days on a rolling window is significantly high relative to its past history. Our May volatility report focused on this dislocation in both implied volatility and realized volatility. Both ratios peaked in May and pulled back slightly in June, though remain close to their highs. 

Figure 4. Ratio of ETH and BTC realized volatility (60-minute returns across 7-day lookback window). Source: Block Scholes

For example, the ratio of ETH to BTC realized volatility on a seven day lookback in June ranged between 1.68 and 2.34. While that is lower than the peak in May of 2.89, we can see that since July 2024, the ratio has been moving in one direction only – higher. Given that we know BTC realized volatility has generally been falling (and faster since January 2025), that suggests the phenomena is unique to BTC alone, and that ETH volatility has either been holding at its usual levels or increasing over time. 

Looking at the absolute values of volatility for each over a seven-day lookback window and overlaying the ratio on top shows the divergence clearest. ETH realized volatility in June held itself at levels around 70% (not an unusual level for ETH historically), while in comparison BTC volatility ranged at a far lower 30%. 

Figure 5. Ratio of ETH/ BTC 7-day realized volatility (white) and BTC (orange) and ETH (purple) 7-day realized volatility (on hourly returns). Source: Block Scholes

When we extend the analysis to SOL we find an even more extreme ratio than that in ETH. On Jun 20, 2025, the SOL/ BTC seven-day realized volatility ratio jumped to 2.96. That has occurred only twice in 2025, the first at the end of January when President Trump launched his own $TRUMP memecoin on the Solana blockchain. Excluding those two occurrences, the ratio last exceeded 2.96 in January 2024.

Figure 6. Ratio of SOL and BTC realized volatility (60-minute returns across 7-day lookback window). Source: Block Scholes

What we find from these two examples is a pattern that suggests ETH and SOL volatility have been growing relative to BTC volatility. Additionally, the ratios have both moved higher since July and August 2024. This tells us that not only is BTC volatility falling in outright terms, but it is also falling against the level of volatility of other crypto assets.

Can we find a cause for this low level of volatility?

Now that we have established that BTC volatility is low, both relative to its own history and relative to two of the largest altcoins by market capitalization, can we find a source for this low level of volatility and can we point to a period where it began? The chart below shows BTC’s realized volatility over several lookback windows on the left-hand axis and daily net ETF flows from BTC Spot ETFs on the right. What stands out is the three distinct regimes of realized volatility since January 2021.

Figure 7. BTC realized volatility, 60-minute returns across 7-, 14-, 30- and 90-day lookback windows, (left-hand axis) and net inflows into Spot BTC ETFs (white, right-hand axis). Source: Block Scholes

The first is from January 2021 until August 2023, where realized volatility levels declined after BTC peaked for the first time in the 2021 crypto cycle. That declining volatility trend then paused between August 2023 and January 2024 as volatility moved sideways for a short period of the time before increasing slowly. This time period coincided with the beginning of the Federal Reserve’s rate pause cycle (beginning August 2023) and later, the beginning of a rally in BTC spot price ahead of accelerating rumours in October and November of a potential Spot BTC ETF approval.

The third regime is post January 2024, after Spot ETFs had been launched in the US. Here, the gradient of the decline in volatility has been flatter relative to the first phase, and larger jumps up in volatility from earlier years have become a rarer occurrence. 

The likely impact of Spot ETF inflows is clearer against the ratio of ETH and BTC volatility too, as opposed to just the outright level of BTC volatility. This helps us normalize BTC’s volatility relative to a wider benchmark for crypto assets. This shows a similar pattern to outright BTC volatility in the first two phases. In phase 3, however, we see the ratio start to increase once more – and in fact increase almost exponentially from January 2025, as the spread in ETH realized volatility and BTC realized volatility began to diverge further away from each other. 

Figure 8. ETH/ BTC realized volatility ratio, 60-minute returns across 7-, 14-, 30- and 90-day lookback windows, (left-hand axis) and net inflows into Spot BTC ETFs (white, right-hand axis). Source: Block Scholes

This however is not conclusive evidence that it is definitively ETF buying of bitcoins that is artificially suppressing the realized volatility levels. While the two have definitely occurred at a similar time to one another, and therefore there is a correlation, proving a causation requires us to dig deeper into the nature of volatility in BTC over this period.

Is Bitcoin volatility lower on the way up or on the way down?

Understanding the size of volatility in any particular direction can help us further explore whether ETFs are suppressing BTC volatility. If large institutions or retail buyers are stepping in during periods of selloffs for example, we expect to see an easing in the selloff pressure as large buyers essentially ‘buy the dip’, or act as a marginal buyer of BTC. 

In this section, we consider two periods – pre-2025 and post-2025. We use these periods since the ratio of ETH to BTC realized volatility particularly increased from January 2025 (i.e., BTC volatility increased in its descent from this period). 

Figure 9. Distribution of the log of daily spot BTC returns. Source: Block Scholes

The chart above shows the distribution of the log of daily spot BTC returns. For a given daily return on the x-axis, the corresponding y-axis value measures how common that return was between 2020 until today. We show the distribution of BTC log returns before and after Jan 1, 2025 for comparison, coinciding with the increase in the ratio of ETH’s volatility relative to BTC’s.

Firstly, we find that volatility is lower on both sides of the distribution: small returns now make up a far larger proportion of daily activity and large positive and negative returns (that live in the right and left tails of the distribution respectively) are relatively more rare. However, we also observe that from 2025, small positive daily BTC returns are more likely, skewing the distribution to the right. 

Figure 10. Empirical cumulative distribution function of the log of daily spot BTC returns. Source: Block Scholes

The empirical cumulative distribution function (ECDF) above shows for each daily log return, the historical probability of getting a return of that size or smaller. As we found with the KDE, there is more mass accumulated to the right – meaning that the red line is above the blue line, such that small positive daily returns are more likely post-ETF. While this again provides further evidence of lower volatility via a reduced likelihood of larger negative returns, it is still difficult to solely attribute it to the voracious buying via Spot BTC ETFs.

What about Ethereum?

If the decline in BTC volatility coincides with the introduction of Spot BTC ETFs, then would we not also expect a decline in ETH volatility post July 2024 – when Spot ETH ETFs were introduced?

Similar to BTC, ETH realized volatility had been on a downtrend between January 2021 and July 2023. However, since that date ETH realized volatility over all lookback window lengths has either held at its levels or risen higher. 

Figure 11. ETH realized volatility, 60-minute returns across 7-, 14-, 30- and 90-day lookback windows, (left-hand axis) and net inflows into Spot ETH ETFs (red, right-hand axis). Source: Block Scholes

Additionally, ETH volatility has continuously maintained a premium to BTC delivered volatility, rising to above a 2x premium more recently. 

Figure 12. ETH/ BTC realized volatility ratio, 60-minute returns across 7-, 14-, 30- and 90-day lookback windows, (left-hand axis) and net inflows into Spot ETH ETFs (red, right-hand axis). Source: Block Scholes

One reason that might explain this is the relative size of the buying pressure from ETH Spot ETFs to BTC Spot ETFs. Below, we take the seven day rolling average of the absolute value of daily inflows into BTC Spot ETF products and divide it by the seven day rolling average of total daily trading volume, as recorded by CoinGecko. We then repeat the same for inflows into Spot ETH ETFs and the respective daily trading volume for ETH, in order to gain a picture of the proportional size of ETF flows for each asset.

Figure 13. Ratio of 7-day rolling average of ETF inflows and 7-day rolling average of daily trade volumes for BTC (orange) and ETH (purple). Source: Block Scholes

We find that BTC ETFs (whether buying or selling) consistently account for a larger proportion of total trade volume of BTC than they do for the total trade volume of ETH. On Oct 30, 2024 for example, days before President Trump won the US election, the 7-day average ratio for BTC was 36x larger than in ETH (1.08% vs 0.03%). Towards the end of May, the ratio in BTC was more than 5x larger than in ETH. 

This highlights that the buying pressure from BTC ETFs is significantly stronger on BTC spot trade volume than it is for ETH. This may partly explain why, if BTC ETF buying activity is responsible for a suppression in BTC volatility in 2025, we don’t see the same impact of ETF buying on ETH volatility.

Conclusion

The month of June extended a broader trend of declining Bitcoin volatility, with both implied and realized measures falling to historically low levels. Despite an increase in geopolitical tensions, President Trump online social media feuds, and positive developments in legislations, BTC volatility remained subdued—particularly at the short-dated end of the term structure.

When comparing BTC’s realized volatility to that of ETH and SOL, we find that low volatility is a Bitcoin-specific phenomenon. ETH and SOL volatilities have not only held up but have increased since July 2023, with their realized volatility ratios relative to BTC remaining close to the multi-year highs set in the previous month of May. This divergence has grown more pronounced since January 2024, aligning with a period of sustained ETF inflows into BTC spot markets.

While this timing overlap suggests a potential link between institutional ETF flows and the suppression of BTC volatility, the evidence so far does stop short of establishing causality. What is clear is that volatility has decreased on both the upside and downside, with a noticeable skew toward smaller, more frequent positive returns in the post-ETF period and less frequent large negative returns post-ETF launch.

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ETH, by contrast, has not experienced the same volatility compression, which may be partly explained by the relative size of ETF flows as a share of daily trading volume. BTC ETFs consistently represent a far larger portion of on-chain activity compared to ETH ETFs, which could account for the differing volatility dynamics.