ETH’s negative funding rate may not be a buy signal at this time.
Main Receptors:
Ether fell 28% on the week to $2,110 as investors cut back on risk and markets turned off rich traders.
Spot ETH ETF hit $447 million as Ethereum network activity dropped 47%.
Ether (ETH) fell to $2,110 on Tuesday, marking a brutal 28% price correction in seven days. Investors retreated to cash and short-term government bonds as the technology-heavy Nasdaq index fell 1.4 percent.
Traders worry that valuations are getting too high and that they are becoming too dependent on the artificial intelligence sector. After Nvidia ( NVDA US ) CEO Jensen Huang denied plans to invest $100 billion in OpenAI, sentiment soured.
Investors braced for more volatility following disappointing quarterly results from fintech giant PayPal ( PYPL US ). Meanwhile, gold prices rose 6 percent and silver rose 9 percent, suggesting a lack of confidence in the U.S. Federal Reserve's ability to prevent a recession.
Concerns over inflated stock market prices prompted traders to increase their risk exposure, causing demand for the heavily leveraged ETH position to evaporate.
ETH Perpetual futures annualized funding turned negative on Tuesday, indicating that shorts (sellers) are paying to hold their positions. This rare shift reflects a significant lack of confidence from long-term (buyers).
Market participants are now debating whether this high fear provided a strategic entry point, especially since ETH has underperformed the broader cryptocurrency market by 10% over the past 30 days.
As other major cryptocurrencies experienced less severe corrections last month, Ether investors became nervous. Bitcoin (BTC) is down 17 percent, BNB (BNB) is down 14 percent, and Tron (TRX) is down 4 percent. Ether's weekly slide to $2,110 forced losses on bullish ETH futures with more than $2 billion in leverage, adding further volatility as market sentiment turned bearish.
Ether pressure was created when exchange-traded funds came out of cooling demand
Ether's price was pushed by $447 million in net inflows from U.S.-listed Ethereum spot exchange-traded funds (ETFs) in five days. Institutional interest has cooled despite gains from companies such as Bitmine Immersion (BMNR US), Sharplink (SBET US) and The Ether Machine (ETHM US). Traders are concerned about selling pressure stemming from the $14.4 billion in total holdings of Ethereum ETFs.
As the demand for decentralized applications (dApps) declines, the demand for ETH has decreased significantly.
Trading volumes on Ethereum decentralized exchanges (DEX) reached 52.8 billion in January, a sharp drop from $98.9 billion in October 2025. This 47% decline in activity reduces incentives for holders; Typically, the high demand for blockchain processing causes the network to burn up, reducing the total supply of ETH.
Related: Spot crypto volumes fall to 2024 lows as investor interest weakens
Addresses linked to Ethereum founder Vitalik Buterin will sell about $2.3 million in ETH, allocating $45 million to privacy technologies, open hardware and secure software. Buterin said he will gradually deploy a total of 16,384 ETH from his personal holdings over the coming years.
The current lack of interest in bullish ETH perpetual futures should not be seen as a sign of an imminent reversal. Onchain metrics continue to weaken, and the overall sentiment is cautious given the prevailing macroeconomic uncertainty.
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