ETH Rally Going To $3K May Be Stopped By Increasing ETH Flow
Main Receptors:
U.S.-listed Ether ETFs have seen significant inflows, with institutional interest fading as demand for network fees, stocks and bonds declines.
ETH futures premium and open interest decreased, indicating a cautious stance and limited confidence, with a clear transition to bearishness.
Ether (ETH) fell to $2,800 on Wednesday, sparking $165 million in liquidity in bullish futures positions. The 13% weekly decline in the price of ETH was accompanied by a large inflow of Ether exchange-traded funds (ETFs), as the artificial intelligence sector was threatened.
The tech-heavy Nasdaq index fell 1.8% on Wednesday, fueling fears among Ethereum investors that further declines could follow.
Shares of Oracle ( ORCL US ) fell 5.5 percent after private lender Blue Owl Capital ( OWL US ) withdrew its backing for a proposed $10 billion data center joint venture. Investor sentiment dampened after Blue Owl Capital reported that it was already involved in Oracle facilities in Texas and New Mexico. The rising value of Oracle's debt protections has sparked broader hedging activity.
Markets are focusing on Thursday's US Consumer Price Index (CPI) report, a key event for risk assets. November's weak-than-expected 2.7% CPI growth allowed Ether's price to regain the $2,950 level. Traders suggest that this cold inflation may lead the Federal Reserve to introduce more economic stimulus, especially since recent figures indicate increasing stress in the labor market.
What is causing the price of ETH to drop?
Ether has underperformed the broader cryptocurrency market by 6% over the past week, with bearish sentiment partly related to demand for Ether ETFs.
US-listed Ether ETFs recorded net outflows of $553 million since Thursday, reversing the flow trend seen over the past two days. These instruments currently hold $17.5 billion worth of ETH and are typically associated with the interests of institutional investors. More worryingly, demand for leveraged positions in ETH futures fell 13% last week.
It fell to $28.1 billion from a peak of $32.4 billion on December 10. Total open interest in ETH futures fell to $28.1. A fall in the allowed position does not automatically indicate bearish sentiment, especially since ETH is already under pressure as it trades 41% below its $4,957 high. Investors often look at monthly futures premiums to determine whether bears are in control.
Ether monthly futures traded at a 3% premium to spot markets on Wednesday, indicating weak demand from long positions. Under independent market conditions, this premium typically covers 5% to 10% of capital costs. The decline in activity on the Ethereum network has also weighed on investor expectations regarding the price of Ether.
Payments generated by decentralized applications (DApps) on the Ethereum network fell to $68 million over the past seven days, down from $98 million four weeks ago. Demand for ETH is closely tied to onchain activity, as high usage creates strong incentives for long-term accumulation. The total ETH locked in stocks fell to 35.69 million ETH from 35.76 million ETH a month ago, indicating that demand for holdings has decreased.
Ether ETF issuance in the U.S. reflects weak investor interest at a time when Ethereum network activity is slowing and demand for slots is declining. Inflows may be needed for more than a few days as traders rebuild confidence, with the broader economic outlook lacking and risk aversion in markets rising.
Related: Crypto ETPs to Enter ‘Cheesecake Factory' Era in 2026–Bitwise
This article is not intended for general information purposes and should not be construed as legal, tax, investment, financial or other advice. The views, ideas and opinions expressed herein are solely those of the author and do not necessarily represent the views and opinions of Cointelegraph. While we strive to provide accurate and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph shall not be liable for any loss or damage arising from reliance on this information.
This article does not contain investment advice or recommendations. Every investment and business activity involves risk, and readers should do their own research when making a decision. While we strive to provide accurate and up-to-date information, Cointelegraph does not guarantee the accuracy, completeness or reliability of any information in this article. This article may contain forward-looking statements that are subject to risks and uncertainties. Cointelegraph shall not be liable for any loss or damage arising from reliance on this information.
