Derive.xyz Market Insights: June 4th 2025

BTC and ETH Steady as Volatility Drops; Market Positioned for Short-Term Moves

June 4, 2025 By Nick Forster

Prices have remained stable over the past 24 hours, with BTC rising 0.5% to $105,650 and ETH up 1.1% to $2,600.

Volatility

Long-dated (180-day) BTC volatility has been on a downward trend, dropping from 56% to 46% over the past two months. This is likely due to Strategy (formerly MicroStrategy) raising funds and selling calls into the market, reducing volatility.

Long dated (180 day) BTC implied volatility

Source: Derive.xyz, Amberdata

In the last 24 hours, volatility has held steady: BTC 30-day volatility remained unchanged at 40%, while ETH volatility dipped 1% to 63%.

On Derive.xyz, traders are seizing the opportunity of cheap convexity. Over 57% of all BTC contracts traded were puts, indicating that traders are bearish on BTC in the short term. This is reflected in the skew (market sentiment), which has shifted toward a more neutral to slightly bearish outlook.

Breakdown of BTC contracts traded on Derive in the last 24 hours

Source: Derive.xyz, Amberdata

Price Predictions

The chance of ETH settling above $3,000 by the end of September has increased slightly to 24% (up from 22%).

While BTC has an 11% chance of closing above $125K by the same date, virtually unchanged from the last 24 hours. This is a drop from 18% last week, reflecting both a lower price and lower implied volatility, which has compressed the distribution of potential outcomes.

Liquidity PositioningMarket makers are currently short gamma, meaning they are required to buy more BTC as the price increases to maintain their hedge, creating a positive feedback loop that drives up demand. However, there's a "gamma hole" at $110K, where market makers will be forced to stop buying once that price point is hit, as they become gamma neutral.

This suggests that even if BTC rallies, the price is likely to remain capped at $110K – we won't see the price exceeding this threshold.