Spike In The Vix

Find out our latest reports, listed below:

• How did options markets react to the crypto selloff?

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• Metaplanet Is Selling Vol, Who Is Next?

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• Bybit x Block Scholes August Volatility Review

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• Bybit x Block Scholes Quarterly Report: What will drive crypto in Q3 2025?

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Market Snapshot: Overnight Moves:

Daily Updates:

• Crypto asset prices continue to extend their losses after a week-long rout that began last Friday. BTC fell from $111K yesterday and now trades below $105K, a 16% drawdown from its all-time high on Oct 6, 2025. 
• Shorter-dated BTC and ETH tenors in options markets have blown out, with ATM implied volatility on one-week contracts trading at 52% (+9.1% in the past 24 hours) and 83% (+11.5% in the past 24 hours). 
• That led to a firm inversion in ETH’s term structure of volatility and milder inversion for BTC. 

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• The moves in implied volatility over the past week follow a sharp spike in realised volatility. 7-day realised volatility has jumped nearly 15 percentage points from 35% prior to President Trump’s tariff announcement last Friday to current levels of 49%. 
• Volatility smile skews reveal that the dramatic spike in implied volatility is the market pricing in for further downside momentum: BTC 7-day put-call skew has exploded to the downside, with OTM puts commanding an 11% vol premium to call options. While not as bearish as the 14% premium priced in last Friday, it’s a major reflection of the demand for downside hedging. 
• Short-tenor smiles for ETH paint an even more bearish picture — 7-day skew is currently trading at -13.1%, which is even lower than the levels reached on Friday. It also marks a dramatic repricing to downside optionality from only a week ago prior to the tariff escalation when 1-week skew was tilted towards calls at 5%. 
• ETH spot is currently trading around $3,700 and is down 7% over the past 24 hours and is now more than 24% below its ATH of $4,946 on Aug 24, 2025. 

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• Demand for both Bitcoin and Ethereum spot ETFs have weakened amidst the week-long selloff too. Yesterday, spot Bitcoin ETFs saw their 10th largest outflow on record (-$530.9M), while Ethereum spot ETFs reported $56.8M in net outflows.

• While the initial selloff last week was sparked by a re-escalation of trade tensions between the US and China, which are yet to be resolved, the most recent leg down in crypto prices since yesterday afternoon coincides with a jolt in US equity markets too.
• Yesterday the S&P 500 ended 0.6% lower and today the VIX index has jumped past 27 — its highest since April 2025. The selloff in equities occurred amidst a plunge in the share price of two regional US banks, Zions Bancorp and Western Alliance. 
• The banks said that they were victims of fraud on loans they provided to investment funds that invest in distressed commercial mortgages. 
• Zions Bancorp fell 13% on the day after it disclosed a $50M charge-off for a loan underwritten by its wholly-owned subsidiary, California Bank & Trust (a charge-off is when a creditor decides a loan is uncollectible after a prolonged period of non-payment, officially writing it off as a loss). 
• Western Alliance Bancorp fell by a similar amount after it declared that it too had made loans to the same borrowers.
• The renewed volatility in the banking sector comes amidst other recent loan blowups: subprime auto lender Tricolor Holdings filed for bankruptcy last month which led to JPMorgan disclosing a $170M charge-off in Q3. 

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• The renewed bout of volatility has continued to advance the gold fever. Gold rose to nearly $4,400 per ounce earlier today before paring back some gains, and is currently up 9% over the past 5 days. That brings its yearly performance to 65%. Meanwhile, the white metal, silver, has surged 87% in 2025, aided by a historic squeeze in supply in London.

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• 30-day Federal funds futures contracts are currently pricing in a 100% probability of a rate cut in the Fed’s upcoming October meeting — that’s split by a 96.8% probability of a 25bps cut and an implied 3.2% probability for a larger 50bps cut. That marks a significant change in the odds from exactly one month ago, when markets had only priced in a 0.3% chance of an outsized 50bps reduction. 

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This Week’s Calendar:

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Charts of the Day:

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