Ether (ETH) experienced a notable correction, dropping 4% over two days after briefly touching $3,400 on Wednesday. This price movement surprised many bullish traders, leading to liquidations totaling $65 million in leveraged ETH futures. Despite this recent surge to a two-month high, professional traders have maintained a neutral-to-bearish outlook, as indicated by derivatives market activity.
The ETH monthly futures basis rate, which represents the annualized premium relative to spot markets, stood at 4% on Friday. This level is generally considered bearish, as sellers typically demand a premium to compensate for the longer settlement period. This lack of strong conviction among traders may be partly attributed to the broader cryptocurrency market's downtrend, even as traditional assets like gold and the S&P 500 index have reached all-time highs in 2026.
Ether's decline to $3,280 has mirrored the broader market, with the total cryptocurrency market capitalization falling by 28% since October 6, 2025. A significant factor contributing to this pressure is the reduced interest in decentralized applications (DApps). The demand for memecoin launches and associated trading activity has waned, highlighting the need for new entrants to invigorate blockchain activity, network fees, and demand for native tokens.
While Ethereum's base layer transactions saw a 28% increase over 30 days, network fees concurrently decreased by 31% from the standardized average. In contrast, transaction volumes on competing networks like Solana and BNB Chain remained relatively stable, with average fees rising by 20%. More concerning for Ethereum's ecosystem, its primary scaling solution, Base, experienced a 26% reduction in transactions during the same period.
ETH Momentum Weak Amid Low Fees, DApps Demand, and Staking Risks
Large holders (whales) and market makers closely monitor overall network usage. Ethereum incorporates a mechanism that burns ETH when there is high demand for processing blockchain data. Reduced network activity directly impacts ETH staking returns, potentially diminishing investor incentives to hold their positions. Currently, 30% of the total ETH supply remains locked in staking.
Regardless of the specific cause, whether it's weaker DApps demand or other factors, traders are unlikely to regain confidence while institutional flows remain subdued. Ethereum spot exchange-traded funds (ETFs) in the United States have recorded modest net inflows of $123 million since January 7. However, publicly traded companies that have invested in ETH are largely holding positions below their purchase price.
For instance, Bitmine Immersion's (BMNR US) market capitalization is currently 13% lower than the $13.7 billion worth of ETH it holds in its corporate reserves. Similarly, Sharplink (SBET US) holds $2.84 billion in ETH, yet its total market capitalization is only $2.05 billion. Despite these companies continuing to acquire ETH at current prices, overall investor confidence in the cryptocurrency appears to be diminishing.
On Friday, ETH put options were trading at a 6% premium compared to call options, a level that typically signifies a neutral-to-bearish market sentiment. This suggests that professional traders are less inclined to take on downside price exposure, indicating low expectations for a significant bullish breakout to $4,100 in the immediate future.
The ongoing decline in network fees further reduces the probability of sustained bullish momentum for ETH. Ultimately, the price of Ether appears to be heavily influenced by external market dynamics rather than internal developments within the Ethereum ecosystem. The skepticism observed among professional traders reflects weak demand for DApps and concerns regarding potential outflows from the ETH native staking program.