Nvidia, which is traded on Nasdaq, was rated as the most important stock of this year by Goldman Sachs. The company’s stock has become an important reference point in the cryptocurrency market, and its price movements in particular show more pronounced volatility than crypto market leaders Bitcoin and Ether.

NVDA’s projected volatility for 30-day options has increased from 48% to 71% annually, according to Fintel data. This projected volatility is an indicator that predicts how volatile prices may be over four weeks and gives insight into how investors may react to market movements.

This increase in options suggests that NVDA’s price may fluctuate predictably and investors are purchasing more options to protect themselves against these fluctuations.

On the other hand, crypto exchange Deribit’s Bitcoin DVOL index, an indicator measuring 30-day projected volatility, fell from 68% to 49%. This decline signals that Bitcoin’s price movements are becoming more predictable and the market is less volatile.

Ether’s (ETH) DVOL index decreased from 70% to 55%, showing that Ethereum’s price movements have also become calmer.

Options are derivative contracts that give investors the right to buy or sell at a certain price on a certain date. These contracts protect buyers against up or down market movements.

Projected volatility in options shows how much the market may fluctuate depending on demand levels and how investors position themselves against these fluctuations.

In this context, the increase in NVDA’s projected volatility suggests that investors are purchasing more options to protect themselves against large price movements and therefore higher volatility in NVDA’s price is expected.

NVDA is known as the pioneer of all developments related to artificial intelligence (AI), and as a manufacturer of graphics processing units previously used for cryptocurrency mining, it has become an indicator of the mood of both the stock and crypto markets since the launch of ChatGPT.

In late 2022, both Bitcoin and NVDA bottomed and have been exhibiting a strong positive correlation ever since. Currently, the correlation between Bitcoin and NVDA’s 90-day prices is measured at 0.73. This high correlation indicates that investors expect similar price movements between the two assets and that the markets are closely related to each other.

NVDA’s stock is down nearly 26% after reaching a peak of $140 last month, signaling bearish signals for the crypto market. According to CoinDesk data, Bitcoin is currently trading between $60,000 and $70,000, indicating that market fluctuations are less pronounced.

It is stated that the increase in NVDA’s projected volatility is associated with hedging activities of market makers. According to crypto finance platform BloFin, a phenomenon known as negative gamma causes market makers to trade in the direction of price movements, which can increase market volatility.

Griffin Ardern, head of options trading and research at crypto finance platform BloFin, said: “Negative gamma is not just dominant in the crypto market. Indices such as SPY and QQQ in the US equity market have also experienced significant declines due to negative gamma hedges, and this high volatility risk is NVDA’s next month. “This has caused the predicted volatility level for to be much higher than cryptocurrencies such as BTC and ETH,” he explains.

Negative or short gamma causes market makers to trade in the direction of price movements in an attempt to keep their overall positions neutral. This adds to the natural volatility of the market and creates additional risks for investors.