- Ethereum volatility is nearing historic lows, but analysts predict a sharp breakout in April as market sentiment shifts.
- Ethereum’s supply on exchanges has dropped to a nine-year low, potentially amplifying price swings if demand surges.
Ethereum traders should prepare for a potential volatility explosion in April, as recent data from decentralized options platform Derive signals an impending breakout. Despite a bearish sentiment shift in the near term, historical patterns suggest that Ethereum’s calm price action might not last much longer.
Implied Volatility at Historic Lows
According to Nick Forster, founder of Derive, Ethereum’s implied volatility is currently at near-monthly lows, with 7-day and 30-day tenors sitting at 59% and 45%, respectively. Such levels are rare and typically do not sustain for extended periods, hinting at an upcoming surge in market activity.
“Historically, such low levels rarely hold,” Forster stated, predicting that April could usher in a significant uptick in Ethereum volatility. This aligns with the notion that suppressed volatility often precedes major price movements in crypto markets.
Ethereum Market Signals Suggest a Sharp Move Ahead
Ethereum’s forward rate—a key measure of expected future value—currently sits below the U.S. 5% treasury bill rate. This indicates weak near-term confidence, but Forster notes that such conditions have previously been followed by rapid 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 explained.
Further fueling the potential for a price swing, Ethereum’s circulating supply on centralized exchanges has dropped to a nine-year low. If demand suddenly increases, the limited availability of ETH on exchanges could lead to amplified price reactions.
Price Predictions: Breakout or Breakdown?
Derive’s latest estimates assign a 30% probability of Ethereum dropping below $1,800 by the end of May, while a 19% chance exists that it could rally above $2,500. This divergence in potential outcomes reinforces the high-stakes nature of the current market setup.
Meanwhile, Bitcoin is showing greater stability by comparison. Derive predicts a 33% chance that BTC could fall below $80,000 by May and a 20% chance it surpasses $100,000.
As Ethereum’s volatility nears an inflection point, traders should stay alert for sudden market moves. Whether Ethereum breaks downward or upward remains uncertain, but one thing is clear—April could be a game-changer for ETH.
