- Ether’s price plunged 28% in a week to $2,110, underperforming the broader crypto market.
- Spot Ethereum ETF outflows hit $447 million as institutional demand cooled sharply.
- ETH perpetual futures funding rates turned negative, indicating extreme bearish sentiment.
- Over $2 billion in leveraged long positions were liquidated during the sell-off.
Ether (ETH) plummeted to $2,110 on Tuesday, marking a brutal weekly decline as investors fled risk assets for cash and bonds. This sharp correction coincided with a 1.4% drop in the tech-heavy Nasdaq Index.
Market sentiment soured after NVIDIA CEO Jensen Huang denied plans for a massive $100 billion investment in OpenAI. Consequently, traders grew wary of valuations overextended by the Artificial Intelligence sector.
Disappointing earnings from fintech giant Paypal added to the volatility, while rising Gold and silver prices signaled eroding confidence in the US Federal Reserve. This risk-version evaporated demand for bullish leveraged ETH positions entirely.
The ETH perpetual futures annualized funding rate turned negative, a rare shift where short sellers pay fees, as data shows. This reflects a profound lack of confidence from buyers debating if the fear presents a strategic entry point.
Ether’s weekly slide forced the liquidation of over $2 billion in leveraged bullish futures, fueling concerns of further downside. Its 30-day underperformance versus the total crypto market capitalization is illustrated in a chart.
Institutional demand cooled further, evidenced by $447 million in net outflows from U.S. spot Ethereum ETFs over five days. Traders remain wary of potential sell pressure from the $14.4 billion held in these aggregate funds.
Meanwhile, Ethereum network activity plummeted as decentralized exchange volumes fell 47% from October highs to $52.8 billion in January, according to DefiLlama. This reduced activity diminishes the network’s ETH burn mechanism.
Separately, addresses linked to co-founder Vitalik Buterin sold $2.3 million in ETH, part of a plan to donate a total of 16,384 ETH over coming years. Consequently, onchain metrics continue to weaken amid prevailing macroeconomic uncertainty.
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