In an exclusive conversation with Coinpedia, Sean Dawson, Head of Research at Derive, shared his views on macro factors and blockchain shaping the cryptocurrency market, especially the trajectory of Ethereum. From the Federal Reserve's policy changes to the increasing role of ETH fund management companies, Sean outlined the factors that could be the biggest drivers for cryptocurrency in 2025.

The Fed May Cut Interest Rates in September

Sean shared with Coinpedia that he expects the Federal Reserve to cut interest rates by 25 basis points in September, with "the odds being 95% on Fedwatch and about 80% on Polymarket."

He believes this possibility is due to stress in the labor market — rising unemployment and weaker revised job reports have created pressure to change monetary policy.

Layer 2 Scalability Compared to Macroeconomic Forces for Ethereum

When asked how upgrades like Dencun might compare to broader macro impacts, Sean clearly responded:

"The main drivers of ETH price in this cycle come from fund management companies like Bitmine and Ethermachine. Currently, they hold 3.6 million ETH (about 3% of total ETH supply), up from almost nothing in April this year."

He explained that the demand for these treasury instruments is largely driven by macro factors — expectations of interest rate cuts and increased U.S. government spending through the "beautiful big bill" have pushed investors towards high-beta activities like ETH treasury.

However, Sean acknowledges that Layer 2 solutions are crucial, providing a vision for a scalable internet financial system, even if macroeconomic dynamics are greater catalysts in the short term.

Ethereum is Making Significant Progress Compared to Bitcoin

Ethereum has recently shown relatively strong performance compared to Bitcoin and Sean sees this trend continuing:

"The sudden increase in ETH fund management companies will be a significant boost for ETH adoption. I can see the ETH/BTC ratio rising from the current 0.033 to the levels of 2017 — around 0.1 to 0.15 — by the end of this year."

2025 Price Outlook

Looking ahead, Sean sees both Bitcoin and Ethereum having significant upside potential:

  • Bitcoin (BTC): The chance of surpassing $150,000 by the end of the year is 50/50, with the potential to exponentially rise to $200,000 at about 12% based on market option prices.

  • Ethereum (ETH): More volatile than BTC, with a 50/50 chance of reaching $6,000 and a 25% chance of reaching $8,000, especially if treasury bond demand and macro trends align.

Ethereum ETF Compared to Bitcoin ETF in the Next Cycle

Regarding whether Ethereum ETFs can surpass Bitcoin ETFs in terms of capital inflow, Sean said:

"It is entirely possible, but unlikely. BTC is the standard cryptocurrency. The utility of ETH will help balance cash flows over time, but BTC may still remain the preferred choice of institutions."

L2 Notification Code in Institutional Investment Portfolio

Sean does not expect Layer-2 tokens to match ETH in the holdings of institutions in the near future:

"ETH took years to reach its current level of popularity compared to BTC. Layer 2s are fragmented and value-based on ETH, so currently, risk-averse institutions will continue using ETH."

Undervalued Layer 1 Ecosystem

While much of his outlook focuses on the adoption of BTC and ETH, Sean notes that Solana could see growth towards the end of the cycle, especially if meme coin trading activity recovers. If Solana adopts the treasury company's strategy, this could reflect ETH's growth trajectory.