Ethereum may be entering a period of heightened volatility, according to the latest outlook from decentralized options platform Derive, which sees signs of a breakout despite bearish indicators in the near term.

Nick Forster, founder of Derive, told Decrypt Ethereum’s implied volatility is currently near monthly lows, with 7-day and 30-day tenors sitting at 59% and 45%, respectively. 

“Historically, such low levels rarely hold,” he said, adding that April could mark the beginning of a sharp upswing in Ethereum volatility.

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 said 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 has fallen to a nine-year low, which could amplify any price reaction if demand rises. 

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.

Bitcoin remains more stable by comparison, with Derive predicting a 33% chance the asset falls below $80,000 by May and a 20% chance it breaks $100,000.

Meanwhile, other layer-1 tokens 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.

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

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