• Ethereum investors expect increased volatility as the US election draws near, considering DeFi's regulatory uncertainties.
• A few whales sold portions of their holdings in contrast to ETH ETF inflows.
• Ethereum could reclaim the $2,395 level if it bounces off a key trendline.

Ethereum (ETH) is down over 4% on Thursday as traders expect high volatility with the US elections approaching. The election results could spark a massive price movement in ETH due to regulatory hurdles the DeFi ecosystem has yet to overcome.

Ethereum sees rising volatility ahead of US election

Due to regulatory uncertainties surrounding the decentralized finance (DeFi) ecosystem, Ethereum traders are positioning for heightened volatility as the US presidential election approaches. The top altcoin's major value driver comes from the host of DeFi protocols that run on top of its blockchain. Hence, DeFi regulatory hurdles could affect ETH's performance.

"The upcoming US election could have a significant impact on ETH, particularly because of its ties to the DeFi ecosystem, which may face regulatory scrutiny depending on the election results," Nick Forster, the founder of DeFi options platform Derive, told FXStreet.

Ethereum's 30 days-to-expiry (DTE) at-the-money (ATM) implied volatility (IV) has increased to nearly 7% compared to Bitcoin's in the past year. Forster highlighted a notable forward volatility spike between October 25 and November 8 in ETH and BTC, rising by 76.6% and 69.8%, respectively.