Risk Appetite Slows as Prices Drive Lower
- Kelsie Papenhausen
- 5 hours ago
- 3 min read
29 May 2026, London, UK.
Signs of weakening risk-sentiment are apparent in both Bitcoin (BTC) and Ethereum (ETH) currently, amidst a macro backdrop of continued geopolitical uncertainty and a more divided Fed.
Our in-house Risk Appetite Index for both assets is no longer at a level that has historically suggested a more bullish momentum in spot price. Additionally, waning Spot ETF demand is likely also weighing on spot price. Since their launch, most rallies in spot have relied on strong institutional demand to underpin them — instead Spot ETF flows have been negative over the past two weeks. Bitcoin Spot ETFs had their ninth day of outflows yesterday and since late January this year, spot price has continuously traded below the average ETF cost basis. The same bearishness is seen in ETH too where Spot ETFs have seen 12 consecutive days of outflows — the longest losing streak since March 2025.
In spite of recent headlines of a tentative 60-day ceasefire extension, the macro environment remains highly uncertain.
Expected volatility in Bitcoin (BTC) and Ethereum (ETH) is close to its lowest levels of the year. 7-day implied volatility briefly traded at 28% earlier this week, a level we last saw back in September 2025. That’s in line with a suppression in realised volatility which at 26%, is also only slightly above its year-to-date low.
This period of low summer volatility has been something we’ve seen before — between May and August last year, 7-day implied vol traded mostly around 30-40%. What’s more unique about this period of low volatility however, is the macro backdrop BTC is trading against. In spite of recent headlines of a tentative 60-day ceasefire extension, the macro environment remains highly uncertain. Markets also, for now, continue to price in a rate hike for March 2027.
Taken together, the year-to-date lows in implied volatility suggests options traders expect spot price to trade range-bound in the near term. While the options market remains skewed towards puts, indicating a preference for downside protection, the low level of outright volatility suggests the demand for downside hedging or directional exposure is not particularly elevated – even with an official peace agreement yet to be announced.
About Block Scholes
Block Scholes is an institutional-grade crypto derivatives research, analytics, data and oracle provider. The company delivers real-time and historical market data, SVI-calibrated volatility surfaces, forward curves, Greeks, pricing feeds, research and strategy tools across crypto options, futures, perpetuals and spot markets.
Block Scholes serves institutional clients across traditional finance and digital assets, including banks, hedge funds, trading firms, exchanges and DeFi protocols. Its data is available on the Bloomberg Terminal, where it provides BTC and ETH crypto options volatility surfaces and related analytics to institutional users.
In DeFi, Block Scholes provides oracle infrastructure for derivatives protocols, delivering pricing, implied volatility and other risk inputs used for trading, margining, settlement and liquidation workflows. It supports a significant share of on-chain options activity and is designed to bring institutional-quality pricing and risk infrastructure to decentralised markets.
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