Derive Predictions Update: March 18th 2025
ETH Struggles, BTC Faces Low-Volatility but Storm Could Be Coming
March 18, 2025 by Nick Forster
In this market update, we dive into the latest predictions for BTC and ETH, highlighting a shift in sentiment. Meanwhile, ETH's struggle continues, with challenges posed by competition from other chains and shifting liquidity. Volatility remains at the forefront, with BTC experiencing a low volatility regime, but expected to rise in the coming weeks due to various geopolitical and regulatory factors.
ETH continues to hover around the $2K mark, facing challenges from divided liquidity and attention spread across multiple Ethereum Layer 2s like Base, Optimism, and Arbitrum.
As of now, we see a 17% chance of ETH reaching over $3K by the end of September, with a 31% chance it could settle below $1.5K by the same date.
ETH is also facing increasing competition from Solana and other alt L1 chains, which are actively attracting attention. Solana, for example, just carried out its first CME block trade, targeting institutional volume.
However, ETH has promising prospects ahead. The delayed Pectra upgrade, which is expected to go live as early as April 25, could bring significant improvements, especially for developers and integrators. While this is exciting, it’s only one factor in a larger picture of long-term adoption.
Real-world assets (RWAs) are becoming an increasingly important area of growth, and ETH is well-positioned to capitalize on this trend. Projects like Ethena and Securitise are pushing the boundaries of EVM compatibility to facilitate institutional adoption of RWAs.
Regarding Bitcoin, its weekly at-the-money (ATM) volatility has dipped below 50% to 49%, approaching monthly lows of 45%. Realized volatility has also dropped from 91% at the start of the month to 54% today.
Volatility is mean-reverting, so we can expect it to rise soon, likely to levels seen in February (60-70%).
There is a 15% chance of BTC exceeding $150K by September, and a 25% chance of it falling below $70K by the same time.
A number of potential catalysts could trigger this: a ceasefire (or lack thereof) in Ukraine, or significant shifts in crypto regulatory policy under the Trump administration.
Outflows from BTC ETFs remain a concern, with $980 million withdrawn from BTC ETFs last week alone. These outflows could cause further volatility in the market as institutional money exits, potentially leading to mass sell-offs.
The recent strategic crypto reserve announcement, while ambitious, faces significant skepticism. Criticism around the inclusion of assets like XRP and ADA raises questions about the viability of such a reserve.
Given the current state of the market, traders are cautious, and we expect to see a mix of continued consolidation and potential volatility in the coming weeks. Both ETH and BTC face major challenges, but their longer-term prospects will depend on how these key developments unfold.