Ethereum usage is at record highs yet ETH nears its longest monthly losing streak since 2018

Ethereum Faces Longest Monthly Losing Streak Since 2018 Crypto Winter

Ethereum (ETH) is nearing a significant milestone: its longest period of consecutive monthly losses since the 2018 crypto winter. Since September 2025, ETH has experienced six straight monthly declines, resulting in a price drop of approximately 60% from its August 2025 peak of $4,953 to below $2,000. This extended losing streak is unusual for a network demonstrating record transaction activity, highlighting a notable divergence between network usage and token value.

Bitcoin as Index, ETH as High-Beta Trade

In broader cryptocurrency selloffs, Bitcoin increasingly acts as the market benchmark, while Ethereum is perceived as a higher-beta investment. This dynamic becomes more pronounced during periods of thinning liquidity and defensive market sentiment. ETH's smaller market depth, higher leverage, and greater sensitivity to macro risk appetite mean that when the market de-risks, Ethereum can experience sharper declines than Bitcoin, particularly when derivatives markets lead the trend.

Data from CoinGlass indicates a significant drop in ETH futures open interest, falling 65% from a peak of nearly $70 billion in August 2025 to around $24 billion. This decline suggests a reduction in market risk-taking. However, it also points to the influence of forced positioning changes, liquidations, and contract roll-downs on ETH's price, which can overshadow discretionary buying during periods of trader risk aversion.

Options markets reflect similar tensions, with Deribit analytics showing sharp increases in short-dated implied volatility and a strong negative skew, indicating a higher premium paid for downside protection. This suggests traders are actively hedging against potential price drops, contributing to a market-implied range of outcomes that highlights significant uncertainty.

Weak Capital Formation Signals for ETH Bulls

The lack of a durable buyer for dips in ETH's price can be attributed to weak capital formation signals. U.S.-listed Ethereum ETFs have seen net redemptions totaling $2.6 billion over the past four months, indicating a lack of sustained institutional interest. This absence of structural positive ETF flows means rallies must be financed elsewhere, often increasing reliance on the volatile derivatives market.

Furthermore, institutional acquisitions from digital asset treasury firms have slowed considerably. ETHZilla, an ETH-focused treasury firm, has reportedly divested its ETH holdings and shifted towards tokenized real-world assets. The stablecoin supply also shows signs of weakness, with Tether's USDT market capitalization dropping for two consecutive months, a trend not seen since the 2022 collapse of Terra's UST. This slowdown in stablecoin supply suggests a contraction in crypto-native purchasing power, which typically coincides with Ethereum's strongest bull phases.

Ethereum's Scaling Progress Complicates Valuation

Despite its ongoing downtrend, Ethereum's network is experiencing significant scaling progress, with daily transactions reaching a new high of nearly 2.9 million in early February, driven by increased on-chain use cases like tokenizing real-world assets and a shift towards cheaper execution on layer-2 networks. While lower fees and higher throughput are beneficial for adoption, this scaling has complicated valuation frameworks that relied on the post-Merge narrative of ETH as "ultrasound money" driven by fee burns and potential net deflation.

The EIP-1559 mechanism, which aims to burn ETH fees, becomes less effective during periods of normal demand or when activity migrates to cheaper execution environments like layer-2s. Data from Ultrasound.money shows instances where ETH issuance has exceeded burn, weakening the deflationary narrative. This necessitates a more nuanced debate on how Ethereum captures value in a rollup-centric future, moving beyond simple analogies like buybacks or dividends.

The current six-month losing streak suggests the market is repricing the link between ecosystem growth and token value, especially amidst limited macro support. The resolution of this streak may depend on one of three scenarios: a capitulation leading to a reset, a prolonged period of consolidation and base-building, or a significant liquidity turn driven by macro tailwinds, stabilizing ETF flows, and renewed stablecoin growth. The latter scenario could shift investor focus from fee compression to Ethereum's indispensability as a settlement layer for a growing economic surface area.

Ultimately, Ethereum is not simply repeating its 2018 performance. The market is testing a new narrative where increased usability does not automatically translate to direct fee monetization during quiet periods. The interplay of macro conditions, capital flows through ETFs and stablecoins, and derivatives market sentiment will determine the future trajectory of ETH's valuation.