Ethereum Volatility Set to Surge in April as Derive Flags Bearish Sentiment Shift

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Ethereum’s Implied Volatility May Be on the Rise, According to Derive

Ethereum’s implied volatility is currently near monthly lows, with 7-day and 30-day tenors sitting at 59% and 45%, respectively, according to Nick Forster, founder of Derive. This could indicate a period of heightened volatility is approaching.

Forster noted that historically, such low levels rarely hold, and April could mark the beginning of a sharp upswing in Ethereum’s volatility.

Contrasting Sentiment in the Near Term

Despite the muted volatility, Ethereum’s forward rate, a measure of expected future value, is currently below the U.S. 5% treasury bill rate, signaling weak near-term confidence. However, Forster pointed out that such conditions have previously preceded price spikes.

“When forward rates are this low, we often see sharp price increases in the following weeks as leveraged positions become more attractive and demand builds,” he said.

Ethereum’s Circulating Supply on Centralized Exchanges

Ethereum’s circulating supply on centralized exchanges has fallen to a nine-year low, which could amplify any price reaction if demand rises. This could lead to a sharp price increase if demand surges.

Derive’s Outlook

Derive estimates a 30% probability Ethereum will dip below $1,800 by the end of May, but a 19% chance it will rally above $2,500. In contrast, Bitcoin remains more stable, with Derive predicting a 33% chance it falls below $80,000 by May and a 20% chance it breaks $100,000.

Layer-1 Tokens Gaining Traction

Other layer-1 tokens, such as XRP, are gaining traction. XRP is seeing renewed interest following the SEC’s decision to drop its lawsuit against Ripple Labs, alongside potential ETF applications under review. Derive projects up to $8 billion in inflows if those funds are approved.

Solana is also seeing increased institutional signals, including a Fidelity-registered fund in Delaware that may evolve into a Solana spot ETF.

Weekly Flows

Ethereum experienced $86 million in outflows last week, compared to $724 million in Bitcoin inflows.

Future Outlook

Short-term sentiment may favor Bitcoin, but the Ethereum Foundation’s roadmap, including Etherealize and the Pectra upgrade, could shift institutional attention back to Ethereum in the second half of 2025, Forster said.

### Conclusion

In conclusion, Ethereum’s implied volatility is likely to rise, with a potential sharp upswing in the near future. The circulating supply of Ethereum on centralized exchanges is at a nine-year low, which could amplify any price reaction. Derive’s outlook suggests a 30% probability of Ethereum dipping below $1,800 by the end of May, but a 19% chance it will rally above $2,500.

### FAQs

* What is Derive’s outlook for Ethereum’s price?
+ Derive estimates a 30% probability of Ethereum dipping below $1,800 by the end of May, but a 19% chance it will rally above $2,500.
* How does Ethereum’s forward rate compare to the U.S. 5% treasury bill rate?
+ Ethereum’s forward rate is currently below the U.S. 5% treasury bill rate, signaling weak near-term confidence.
* What is the current circulating supply of Ethereum on centralized exchanges?
+ The circulating supply of Ethereum on centralized exchanges has fallen to a nine-year low.
* How does Derive’s outlook for Bitcoin compare to Ethereum?
+ Derive predicts a 33% chance Bitcoin will fall below $80,000 by May and a 20% chance it will break $100,000.