BTC and ETH short-term volatility surges, what is the connection with Trump’s remarks?

This week, the cryptocurrency market fluctuated violently, and President Trump’s remarks on cryptocurrencies have shown great influence. Implicit volatility IV soared, BTC's short-term volatility continued to remain at 90%, and ETH's short-term volatility directly exceeded 110%. This phenomenon has attracted great attention from the market, and its connection with Trump's speech is worthy of in-depth exploration.

On March 2 local time, Trump announced on his social media platform Truth Social that he would consider including Bitcoin (BTC), Ethereum (ETH), Ripple (XRP), Solana (SOL) and ADA (ADA) in the new strategic reserve of cryptocurrencies in the United States, hoping to build the United States into the "world's cryptocurrency capital." As soon as the news came out, the cryptocurrency market was instantly boiling, and the price of the cryptocurrency named soared. Data from cryptocurrency data and analytics company CoinGecko shows that the total cryptocurrency market rose about 10% to more than $300 billion in hours after Trump’s post. This fully demonstrates the strong stimulating effect of Trump's remarks on the market. Investors have poured into the market based on expectations of future policies, driving prices to rise rapidly.

However, the market carnival did not last long. Coindesk data shows that as of 11:30 on the 4th, Bitcoin has fallen by more than 9% in the past 24 hours to US$83,986/piece, and Ethereum has fallen by more than 15% in the past 24 hours to US$2,056/piece, both lower than the level before Trump posted. The sharp pullback in prices further exacerbated the market's volatility. Behind this violent fluctuation is closely related to Trump's speech. On the one hand, the details of the cryptocurrency strategic reserve plan proposed by Trump are not clear. After the initial excitement, the market began to calmly think about the feasibility and specific path of its implementation. Due to the lack of clear information, investors' confidence has been shaken, resulting in some funds withdrawal and prices falling.

On the other hand, Trump announced on March 3 that reciprocal tariffs will begin on April 2, and the United States imposed a 25% tariff on Mexican and Canadian goods will take effect on March 4. The news has intensified investors' concerns about the "trade war" and have sold risky assets, including cryptocurrencies. In this complex macroeconomic and policy environment, the cryptocurrency market is affected by the interweaving of multiple factors. Trump's remarks on the strategic reserves of cryptocurrencies have ignited market enthusiasm, and subsequent tariff policies have brought huge uncertainty to the market, prompting investors to frequently adjust their investment strategies, which has led to a surge in short-term volatility of BTC and ETH.

From the perspective of market sentiment, investors' panic about the short-term trend of cryptocurrencies is spreading, and market uncertainty makes investors' emotions extremely sensitive. Trump's remarks have become the only hot spot in the current market, attracting the attention of all investors, while other tracks seem relatively dull. In this case, investors reacted strongly to any turbulence in Trump's remarks. When Trump proposed a strategic reserve plan for cryptocurrency, investors expected that the US government's attitude towards cryptocurrencies would undergo a major change, and more policy benefits may be ushered in the future, so they actively bought to drive prices up. When the market doubts about policy details and was impacted by other macro policies, investors quickly turned to selling, resulting in a sharp drop in prices and volatility increased significantly.

The performance of the options market can also reflect the correlation between Trump's speech and cryptocurrency volatility. Option market makers have continued to relax the intensity of selling recently and allow IV to rise, which is a clear risk aversion manifestation. At a time when cryptocurrencies are extremely uncertain, market makers need more room to ensure profits. In contrast, the buyer made a huge profit in the past two weeks. Behind this phenomenon, Trump's speech played a key role. His speech led to intensified market volatility, creating more profit opportunities for option buyers. In order to cope with uncertainty, market makers had to adjust their strategies and relax the intensity of selling, which caused the IV to soar, further reflecting the instability of the cryptocurrency market under the influence of Trump's remarks.

In addition, the market's perception of cryptocurrencies has also changed due to Trump's speech. There were many uncertainties in the cryptocurrency market, including unclear regulatory policies and imperfect market mechanisms. Although Trump's speech seems to have brought the dawn of good policy to cryptocurrencies, it also brings more unknown factors. Investors find it difficult to accurately judge how the U.S. government will implement the cryptocurrency strategic reserve plan in the future and what profound impact this plan will have on the entire cryptocurrency market ecosystem. This uncertainty makes market participants more cautious and trade more frequently, which in turn drives the continued rise in short-term volatility of BTC and ETH.

In general, Trump’s recent remarks on cryptocurrencies have established a close connection with the soaring short-term volatility of BTC and ETH through various aspects such as influence investor expectations, market sentiment, and trading behavior of market participants. In the complex and changeable market environment, Trump's remarks have become one of the key factors that trigger violent fluctuations in the cryptocurrency market, and its subsequent direction will still have a significant impact on the cryptocurrency market.