Why Is the Spread between IV and HV Often Wider in the Cryptocurrency Market than in Traditional Finance?

The spread between Implied Volatility (IV) and Historical Volatility (HV) is often wider in the cryptocurrency market due to the extreme "tail risk" and the 24/7 nature of the market. Crypto investors are willing to pay a much higher premium (driving up IV) for options to hedge against sudden, massive, and unpredictable price drops (tail risk) that are more common in crypto.

Furthermore, the constant, non-stop trading means market makers price in higher uncertainty, leading to a consistently elevated IV relative to the realized HV.