Key takeaways:
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Ether fell 28% in a week to $2,110 as investors de-risked and markets eliminated leveraged traders.
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ETH spot ETF outflows hit $447 million as Ethereum network activity dropped 47%.
Ether (ETH) fell to $2,110 on Tuesday, signaling volatility after a brutal 28% price correction in seven days. Investors retreated to cash and short-term government bonds as the tech-heavy Nasdaq index also fell 1.4%.
Traders fear that valuations have become overly inflated and overly reliant on the AI ​​sector. The mood deteriorated after Nvidia (NVDA in the US) CEO Jensen Huang denied plans to invest $100 billion in OpenAI.
Investors braced for additional volatility following disappointing quarterly results from fintech giant Paypal (PYPL US). Meanwhile, gold prices rose 6% and silver prices rose 9%, suggesting a lack of confidence in the US Federal Reserve’s ability to prevent a recession.
Concerns about inflated stock market valuations have made investors increasingly risk averse, causing demand for bullish, leveraged ETH positions to evaporate.
The annual funding rate for ETH perpetual futures turned negative on Tuesday, indicating that brief traders (sellers) are paying fees to maintain their positions. This infrequent change reflects a deep lack of confidence on the part of longs (buyers).
Market participants are currently debating whether this extreme fear represents a strategic entry point, especially since ETH has underperformed the broader cryptocurrency market by 10% over the last 30 days.
Ether investors have become uneasy as other major cryptocurrencies have endured less severe corrections over the past month; Bitcoin (BTC) fell 17%, BNB (BNB) fell 14%, and Tron (TRX) fell 4%. Ether’s weekly drop to $2,110 forced the liquidation of more than $2 billion in leveraged bullish ETH futures contracts, fueling fears of further declines as market sentiment deteriorates.
Ether under pressure as exchange-traded fund outflow signals cooling demand
The ether price was further weighed down by a net outflow of $447 million from US-listed exchange-traded funds (ETFs) over a five-day period. Institutional demand has weakened despite continued accumulation from companies such as Bitmine Immersion (BMNR US), Sharplink (SBET US), and The Ether Machine (ETHM US). Traders remain wary of potential selling pressure from holdings of a total of $14.4 billion in Ethereum ETFs.
As interest in decentralized applications (dApps) declines, the appetite for ETH has decreased significantly.
Trading volume on decentralized Ethereum exchanges (DEX) reached $52.8 billion in January, down sharply from $98.9 billion in October 2025. This 47% drop in activity reduces incentives for holders; typically, high demand for blockchain processing triggers a network combustion mechanism that reduces the total supply of ETH.
Related: Spot cryptocurrency volumes fall to 2024 lows amid weakening investor demand
Addresses associated with Ethereum co-founder Vitalik Buterin sold approximately $2.3 million worth of ETH after committing $45 million in donations to privacy technology, open hardware and secure software. Buterin said that a total of 16,384 ETH from his personal holdings will be gradually deployed over the coming years.
The current lack of demand for bullish ETH perpetual futures should not be viewed as a signal for a quick trend reversal. Onchain metrics continue to weaken and overall sentiment remains cautious given the prevailing macroeconomic uncertainty.
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