Ether Funding Turns Negative, But Bears Remain in Control: Why?

Key considerations:

• The price of Ether struggled as investors pulled $225 million from spot ETFs and Ethereum staking rewards underperformed compared to the coin’s stable yield.

• Recent improvements to the Ethereum network and plans to improve the security of wallets are positive, but may not jump-start demand for Ether.

The price of Ether (ETH) has repeatedly failed to hold above $2100 over the past month, gradually reducing traders’ confidence in the altcoin. Even with a 7% gain between Monday and Tuesday, ETH derivatives metrics are showing a lack of interest in tight bullish positions, possibly indicating that the bears remain in control.

Perpetual ETH futures fell into negative territory on Tuesday, indicating increased demand for short (down) positions. More importantly, this indicator has remained within the neutral range of 6% to 12% over the past month. Part of this investor frustration stems from the 54% price drop in six months, although the cooling of onchain activity also played a role.

Weekly base layer payouts on the Ethereum network have averaged $2.3 million over the past month, down from a peak of $8 million in early February. While the number of 7-day transactions has stabilized near 14 million, the current industry’s focus on Layer 2 scalability has so far failed to generate new demand for native Ether.

Unlike the perpetual futures markets, ETH’s risk gauge was neutral near the -6% to +6% range on Tuesday. Put (sell) options are trading at 7% versus calls (buy), suggesting confidence is slowly returning among Ether bulls. Furthermore, no competitor has yet challenged Ethereum’s $56 billion in total block value (TVL).

Ether exchange-traded funds (ETFs) saw $225 million in net outflows between Thursday and Monday, reversing Wednesday’s $169 million inflows. This measure serves as a proxy for institutional demand, which is currently maintained by the 2.8% native premium rate. By comparison, the stablecoin yield on Sky Lending (formerly MakerDAO) was 3.75% higher.

Weak demand for ETH ETF and concerns with Ethereum roadmap

Excitement around US ETF rate approvals due at the end of 2025 has yet to translate into sustained demand. One could argue that the negative result was simply the result of bad luck, as the launch coincided with the broader crypto market downturn that began in early October after the total market capitalization approached $4 trillion.

related to: Was Ethereum ‘ultrasound money’ a mistake? ETH is down 65% against BTC since the pivot

ETH has underperformed the broader cryptocurrency market since October 2025, and there are no signs that the turnaround will continue. Investor sentiment was also hurt by the huge $735 million loss from Ethereum escrow firm Sharplink (SBET US) in 2025. The company, chaired by Ethereum co-founder Joseph Lubin, released these financial results on Monday.

The native chain’s scalability speed may contribute to Ether’s negative performance. For example, Ethereum co-founder Vitalik Buterin said on Saturday that account abstraction, the equivalent of smart accounts, would likely ship “within a year” after more than a decade in development. Transactions can refer to each other’s information, enabling quantum-proof wallets.

Another advantage of the upcoming Ethereum Hegota fork is to pay gas fees in non-ETH tokens using dedicated decentralized exchanges while adding a “public mempool” and removing “public issuers” in privacy platforms such as Railgun and Tornado Cash. Buterin also said he expects a “progressive reduction” in slot times and end times in the long run.

Overall, ETH derivatives and onchain activity point to a break above $2,200 with little confidence, but at the moment, there are no signs of worsening conditions or bearish dominance.