Is ETH Blinking Negative Funding Amount But ETH Discount Below $3K?

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ETH as $480 million liquid selling pressure and falling network fees affect the investor confidence.

ETH's negative funding volume could play a role in a possible rally.

Ether (ETH) price faced a three-day correction of 13.8%, retesting the $2,900 support on Wednesday for the first time in four weeks. The move followed a sharp fall in the cryptocurrency market as traders countered fears of a worsening socio-economic environment.

ETH regained the $3,000 level after US President Donald Trump halted tariff hikes on several EU countries. However, traders fear a further fall after the release of $480 million in highly leveraged positions in two days.

Funding on ETH Perpetual futures briefly turned negative on Wednesday, meaning shorts (sellers) had to pay to keep their positions open. In neutral situations, this indicator should reach from 6% to 12%, long (buyers) pay for capacity. Still, a lack of confidence isn't necessarily a sign of depression.

Traders fear that institutional interest in Ethereum has faded following the recent exit from Ethereum spot exchange-traded funds (ETFs). These investment tools currently hold more than $17 billion worth of ETH, which represents a significant market cap.

The US-listed Ether ETF saw net inflows of $230 million on Friday, reversing last week's trend of average net inflows of $96 million. More importantly, companies that focused on collecting ETH as a backup strategy, including Bitmine Immersion (BMNR US) and Sharplink (SBET US), suffered significant accounting losses.

Are bears in charge?

To ensure that professional traders can reverse the depression, one must evaluate the demand for ETH options. As whales and market makers fear further downside, the skewed metric moves above 8% as options (puts) trade at the same price as the corresponding call (buys) instruments. In contrast, bull markets usually follow an indicator below -8%.

According to ETH options skew, traders are currently asking for an 11% premium to hold low exposure, the highest level in seven weeks. Far from being an indication of a bearish bet, the indicator reflects trader discomfort as Ethereum Network OnChain metrics continue to decline following ETH's decline of $3,400 in the past 10 weeks.

According to Nansen, Ethereum network fees are down 20% from their peak last week. Meanwhile, competitor Solana experienced 36% higher fees, while BNB Chain collected 27% higher fees. Solana's leadership in transaction volume is undisputed, as the sum of Ethereum's base layer and volume solutions stood at less than 570 million in seven days.

RELATED: ETH Whales Buy the Dip, But Will Collectors Block a Fall to $2.7K?

Ether's path to recapturing $3,400 is heavily dependent on economic visibility, which includes artificial intelligence infrastructure and resolving economic and geopolitical conflicts.

With a lack of demand for used bullion ETH positions and increasing competition from decentralized applications processing data, the likelihood of a sustained Ether price rally in the near term is slim.