How Does the Threat of a 51% Attack Affect the Implied Volatility of a Crypto Option?

The threat of a 51% attack significantly increases the perceived risk of the underlying asset's price collapsing or transactions being reversed. This uncertainty translates directly into higher implied volatility (IV).

Option traders will price this systemic risk into the contract, leading to higher premiums for both call and put options. The higher IV reflects the market's expectation of extreme price movement.