We’re living in crazy times: the expected volatility of US Treasuries is at its highest value since the launch of Ethereum.

In heavy contrast, Ethereum is less than two weeks removed from its all-time low in volatility (on a 90-day rolling basis). Depressed volatility is common in the middle of a bear market, and volatility is generally low across the entire cryptosphere, but for those who like the analogy of Ethereum as The Internet Bond, the behavior could not be more out of touch right now.

Volatility is down across the space, but for Ethereum it is particularly pronounced. If we compare the change in volatility for ether vs other major cryptoassets, almost all major tokens have surging volatilities relative to Ethereum over the past few months.

Ethereum’s transition to proof-of-stake certainly played a role, but the trend is striking even just looking at 2023.

The reason for this (imo) is the Shanghai fork. The ecosystem is faced with persistent fearmongering, and the potential for large upside once the upgrade is de-risked. The dichotomy has pinned the price of ether, and as a result also its price volatility. Until the upgrade is live, price changes will likely remain constrained, and if price action for the ecosystem is bullish, we’ll likely see Bitcoin continue to outperform.

To put the current volatility situation in perspective, Ethereum’s 90-day rolling volatility is currently lower than Bitcoin’s. This volatility cross has only happened three times: twice in late-2017 and once in the Summer of 2019.

In 2017, the biggest driver of the cross was surging Bitcoin price and volatility. With new participants flooding the space and discovering Ethereum, the relative volatilities flipped back and forth as both assets surged. This ignited rapid run that saw Ethereum more than triple relative to Bitcoin in only two months, as both assets skyrocketed and then crashed.

The initial volatility cross marked the bottom of the ratio for the era.

The other historic period that saw a volatility cross was the 2019 bear market. This prolonged era saw traders leave the space and many people write off Ethereum—interest waned and didn’t truly return until the pandemic and DeFi summer.

The volatility cross in 2019 also marked the bottom of the ETH/BTC ratio and precipitated a three-year bull run that saw Ethereum outperform Bitcoin dramatically.

This weekend’s cross has components of both: we’re in the midst of a bear market with hype moving from crypto to AI, and diminishing faith in the banking system is driving a surge of interest (and possibly entrants) into Bitcoin.

Will we see similar price action in the coming weeks or years? Who knows, but we’re living in truly rare and historic times, and I’m excited for the volatility-explosion post-Shanghai.

I bought more Bitcoin today for the first time in recent memory, but I bought more Ethereum (not financial advice—like seriously I’m some random anon on the internet).