Key takeaways:

• ETH derivatives show caution as professional investors remain neutral to bearish, with frail demand for DApps and falling fees putting pressure on the Ether price.

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• Corporate ETH purchases and spot ETF inflows have failed to restore investor confidence as lower staking returns and frail network activity persist.

The price of ether (ETH) experienced a two-day correction of 4% after briefly reaching $3,400 on Wednesday. The move surprised bulls, triggering the liquidation of $65 million worth of long leveraged ETH futures contracts. More importantly, according to derivatives markets, professional traders maintained a neutral to bearish bias even as ETH hit a two-month high.

On Friday, monthly ETH futures were trading at a 4% annual premium (base rate) compared to spot markets. Levels below 5% are considered bearish because sellers typically demand a premium to compensate for the longer trading period. This lack of confidence can be partly explained by the acute downtrend in the broader cryptocurrency market, with gold and the S&P 500 index hitting all-time highs in 2026.

The drop in Ether price to $3,280 closely follows the 28% decline in total cryptocurrency market capitalization since October 6, 2025. Lower interest in decentralized applications (DApps) has weighed on prices, especially after triggering demand for memecoin and a decline in trading activity. New entrants are indispensable to driving blockchain activity, fees, and demand for native tokens.

Ethereum base layer transactions increased by 28% in 30 days, but network fees decreased by 31% compared to the standard average. In comparison, transactions on competitors Solana and BNB Chain remained relatively stable, while fees increased by an average of 20%. More worryingly, Ethereum’s largest scaling solution, Base, saw a 26% decline in transaction volume over the same period.

ETH momentum is frail due to low fees, demand for DApps, and staking risks

Whales and market makers are very sensitive to overall network utilization because Ethereum has a built-in mechanism that burns ETH during periods of excessive blockchain data processing demand. Lower network activity reduces ETH staking returns, making investors less motivated to hold positions. Currently, 30% of the total ETH supply remains locked in staking.

Whether the lack of bullish momentum in Ether simply reflects weaker demand for DApps, it is unlikely that investors will regain confidence while institutional flows remain neutral. Ethereum spot Exchange Traded Funds (ETFs) in the United States have seen a modest net inflow of $123 million since January 7, while publicly traded companies that bought ETH remain mostly in the red.

Bitmine Immersion’s (BMNR US) market capitalization was 13% below the $13.7 billion worth of ETH held in corporate reserves. Similarly, Sharplink (SBET US) holds ETH worth $2.84 billion while the company’s market capitalization was $2.05 billion. Even if these companies continue to purchase ETH at current levels, investor confidence in the cryptocurrency continues to decline.

ETH put (put) options were trading at a 6% premium to call (call) instruments on Friday, a level considered the threshold of a neutral to bearish market. Professional ether investors appear less comfortable maintaining exposure to a bearish price, signaling low expectations for a bullish breakout to $4,100 in the near term.

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The decline in network fees further reduces the likelihood of the upward trend continuing. Ultimately, the price of ETH seems to be largely dependent on external factors rather than the development of the Ethereum ecosystem itself. Professional traders’ skepticism reflects frail demand for DApps and concerns about potential outflows from the native ETH staking program.