Derive Predictions Update: February 25th 2025
Market Reacts to Recent Price Drops of BTC, ETH, SOL
By Dr. Sean Dawson
The market has seen notable reactions to recent price movements, with BTC, ETH, and SOL all experiencing sharp declines in the last 24 hours.
Bitcoin has seen a 4.5% drop in the last 24 hours, most likely due to the continued exodus of institutional funds from major BTC ETFs. Over the past three weeks, more than $900 million in net BTC ETF outflows have been recorded. Investors are pulling funds in the face of macroeconomic volatility, including concerns around the Trump presidency, the Ukraine, China and Gaza conflicts, and the potential for rising interest rates.
As a result, the chance of BTC settling above $100K by the end of March 28 has fallen to 30%, down from 39% just 24 hours ago. Additionally, the probability of BTC reaching $125K by June 27 has dropped from 19% to 15%.
Traders on Derive are reacting by adjusting their positions, with a slight increase in BTC 7-day ATM IV, now sitting at 46%, reflecting heightened market uncertainty.
For Ethereum, it has experienced an even steeper decline, down 11.3% in the last 24 hours. This drop follows the $1.4 billion Bybit hack, allegedly attributed to the Lazarus group, which has reportedly acquired more ETH than the ETH Foundation itself.
While the hack raised concerns, macroeconomic factors, including the potential for interest rate hikes and stagnant institutional ETF inflows, have also weighed on the market.
As a result, the chance of ETH reaching above $3,000 on March 28 has decreased from 32% to 20%, and the likelihood of ETH surpassing $4,000 on June 27 has dropped from 16% to 11%.
On Derive.xyz, 48.1% of contracts saw calls bought, reflecting a desire for leverage despite the bearish sentiment, while 20.3% of puts were bought, signaling traders’ hedging strategies.
The 7-day ETH ATM IV has climbed from 63% to 68%, indicating increased volatility expectations.
In regards to Solana, it has had a rough 24 hours, down 16.1%, nearly doubling ETH’s decline.
The SOL/BTC ratio has dropped sharply, from 1 SOL = 0.00275 BTC in mid-January to 0.0016 BTC today.
The fading meme-mania narrative around Solana, especially in the aftermath of the LIBRA token rugpull, has led to reduced confidence in the platform, causing a large outflow of funds. This has contributed to a lower token price and rising volatility, with 7-day SOL ATM IV spiking back to 87%, up from 69% on February 14.
On Derive.xyz, this increase in implied volatility reflects traders’ heightened uncertainty, with increased interest in both downside protection and upside speculation.