Ether Funds Turn Negative, But Bears Still Retain Control: Why?

Key Takeaways:

• Ether prices suffered as investors withdrew $225 million from spot ETFs and Ethereum staking rewards underperformed stablecoin returns.

• Recent Ethereum network upgrades and improved wallet security initiatives, while positive, have failed to spur demand for Ether.

Ethereum (ETH) price has repeatedly failed to maintain levels above $2,100 over the past month, gradually eroding traders’ confidence in the altcoin. Despite a 7% rise between Monday and Tuesday, ETH derivatives indicators suggest a lack of interest in leveraged bullish positions, potentially indicating that bears remain in control.

ETH perpetual futures fell into negative territory on Tuesday, indicating increased demand for short (bearish) positions. More importantly, this indicator has remained below the neutral 6% to 12% range over the past month. Part of this investor disappointment stems from a 54% price decline in six months, although cooling on-chain activity played a significant role.

Weekly base tier fees on the Ethereum network averaged $2.3 million last month, down from a high of $8 million in early February. Although 7-day transaction numbers have stabilized near 14 million, the industry’s current focus on layer 2 roll-up scalability has not created new demand for native Ether.

Unlike the perpetual futures market, the ETH options risk gauge hovered near a neutral -6% to +6% range on Tuesday. Put options are trading at a 7% premium to call instruments, suggesting that confidence is slowly returning among Ethereum bulls. Moreover, no competitor has yet challenged Ethereum’s $56 billion Total Value Locked (TVL).

Ethereum exchange-traded funds (ETFs) recorded net outflows of $225 million between Thursday and Monday, reversing the $169 million inflows seen on Wednesday. This indicator serves as a proxy for institutional demand, which is currently limited by the default staking reward rate of 2.8%. In comparison, Sky Lending (formerly MakerDAO)’s stablecoin return was higher at 3.75%.

Vulnerabilities Concerns about ETH ETF demand and Ethereum roadmap

The excitement surrounding the US approval of ETF staking in late 2025 has not yet translated into sustainable demand. One could argue that negative outcomes are simply the result of bad luck. That’s because its launch coincided with the broader cryptocurrency market slump that began in early October after total market capitalization reached an all-time high of $4 trillion.

relevant: Was Ethereum’s ‘ultrasonic currency’ a mistake? After the pivot, ETH fell 65% against BTC.

ETH has underperformed the broader cryptocurrency market since October 2025, and there are no signs that a turnaround is underway. Investor sentiment was also damaged by Ethereum treasury company Sharplink’s (SBET US) staggering $735 million net loss in 2025. The company, chaired by Ethereum co-founder Joseph Lubin, announced these financial results on Monday.

The speed of native chain scalability may have contributed to Ether’s negative performance. For example, Ethereum co-founder Vitalik Buterin said Saturday that an account abstraction equivalent to smart accounts would likely be released “within a year” after being developed for more than a decade. Transactions can reference each other’s data, making quantum-resistant wallets possible.

Another advantage of the upcoming Ethereum Hegota fork is that it will use a purpose-built decentralized exchange to pay gas fees with tokens other than ETH, while adding a “universal public mempool” and eliminating “public broadcasters” from privacy-preserving platforms like Railgun and Tornado Cash. Buterin also said he expects slot times and finality times to “progressively decrease” in the long term.

Overall, ETH derivatives and on-chain activity point to low confidence in a bullish breakout above $2,200, but at the same time, there are no signs that things will worsen or the bears will dominate.