Key takeaways:
– Ether plunged 28% in a week to $2,110 as investors cut risk and leveraged positions were wiped out.
– US-listed spot ETH ETFs saw $447 million in outflows while Ethereum network activity slid 47%.
Ether (ETH) collapsed to $2,110 on Tuesday after a brutal 28% correction over seven days, underscoring market fragility as investors fled to cash and short-duration government bonds. Tech-share weakness on the Nasdaq, which fell about 1.4%, and investor concerns that equity valuations were overly dependent on AI gains weighed on risk appetite. Sentiment was further dented after Nvidia’s CEO denied any plans to invest $100 billion in OpenAI, and disappointing results from PayPal added to caution. Meanwhile, gold and silver rallied, up roughly 6% and 9% respectively, signaling diminished confidence in the Fed’s ability to avert a slowdown.
The ETH perpetual futures annualized funding rate turned negative on Tuesday, a shift that means shorts are paying fees to hold positions and reflects weak demand from longs. That atypical dynamic has prompted debate about whether the negative funding rate is a buying opportunity — especially with ETH underperforming the broader crypto market by about 10% over the past 30 days.
Ether’s decline was sharper than most peers: Bitcoin fell roughly 17%, BNB about 14% and Tron around 4% over the month. The selloff triggered over $2 billion in liquidations of bullish ETH futures, amplifying downward pressure as forced-selling cascaded through leveraged positions.
Pressure was compounded by $447 million in net outflows from US-listed Ethereum spot ETFs over five days, indicating cooling institutional demand despite ongoing accumulation by a few firms. The ETFs collectively hold about $14.4 billion in ETH, and investors are wary of potential sell-side pressure from large holdings. At the same time, on-chain usage has cooled: decentralized exchange volumes on Ethereum slid to $52.8 billion in January from $98.9 billion in October 2025, a 47% drop that reduces fee-burning incentives tied to network usage.
Ethereum co-founder Vitalik Buterin moved about $2.3 million of ETH linked to his addresses after earmarking $45 million for donations to privacy tools, open hardware and secure software; he plans to deploy 16,384 ETH from his holdings gradually over coming years.
Taken together, the data suggest that the absence of bullish demand for perpetual futures, declining on-chain activity and ETF outflows are not clear signals of an imminent rebound. Negative funding rates historically have sometimes preceded short squeezes and recoveries, but with weakening network metrics and elevated macro uncertainty, traders should be cautious about interpreting the current funding inversion as a reliable buy signal.
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