ETH reached 3.4 thousand dollars, but several factors put a pause on the Ether Rally

Main Receptors:

As cautious traders remain neutral about ETH derivatives, and weak demand for DApps and falling fees will put pressure on Ether's price.

Corporate ETH buying and spot ETF flows have not restored investor confidence as low stock yields and soft network activity continue.

Ether (ETH) price experienced a two-day correction of 4% after briefly reaching $3,400 on Wednesday. The move caught bulls by surprise, with $65 million invested in long ETH futures. After all, professional traders have maintained a neutral-to-bear position, as in the derivatives markets, even though ETH has reached a two-month high.

ETH monthly futures were trading at a 4% annual premium (base rate) relative to spot markets on Friday. Rates below 5% are considered weak, as sellers demand a premium to compensate for longer settlement times. This lack of confidence can be explained in part by the sharp decline in the broader cryptocurrency market, with gold and the S&P 500 index jumping to all-time highs in 2026.

Ether's drop to $3,280 closely corresponds to a 28% drop in the total cryptocurrency market capitalization as of October 6, 2025. Low demand for decentralized applications (DApps) weighed on value, especially after memecoin launched and business activity faded. New arrivals are essential to stimulate blockchain activity, payments and native interest.

Ethereum base layer transactions increased by 28% in 30 days, but network fees decreased by 31% compared to the level average. In comparison, transactions on competitors Solana and BnBChain were relatively stable, while fees jumped by an average of 20 percent. More concerning, Ethereum's largest scaling solution, Base, saw a 26 percent drop in transactions over the same period.

Amid low fees, demand for DApps, and worrisome risks, ETH's momentum is weak.

Wells and market makers are very sensitive to overall network usage, as Ethereum has a built-in mechanism that burns ETH when it needs to process blockchain data. Lower network activity reduces ETH profits, leaving investors with no incentive to hold positions. Currently, 30% of the total ETH supply is locked up in shares.

While Ether's lack of bullish momentum simply reflects weak demand for DApps, traders are unlikely to feel confident while institutional flows remain neutral. Ethereum spot exchange-traded funds (ETFs) in the United States have recorded modest net inflows of $123 million since January 7, while publicly listed companies that bought ETH remain afloat.

Bitmine Immersion (BMNR US) market capitalization stands 13% below the $13.7 billion worth of ETH held in its corporate reserves. Similarly, Sharplink (SBET US) holds $2.84 billion worth of ETH, while the company's market capitalization totals $2.05 billion. Although these companies continue to earn ETH at current levels, investor confidence in the cryptocurrency continues to erode.

ETH posted options trading at a 6% premium relative to call (buy) instruments on Friday, a level considered the limit of a neutral-to-bearish market. Ether professional traders are less comfortable holding low price exposure, which indicates low expectations for a near-term breakdown of $4,100.

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Declining network charges will further reduce the likelihood of a sustained slowdown in bullying. Finally, the price of ETH appears to be more dependent on external factors than the growth in the Ethereum ecosystem. The skepticism of professional traders reflects the weak demand for DApps and potential risks from ETH's native staking program.