Ethereum Derivatives Show No Momentum, Raising Doubts Over $4K Rally

Despite a 56.5% surge in Ether price over the past 30 days, derivatives data reveals cautious sentiment among traders. This hesitation comes as Ethereum struggles to break the psychological $4,000 barrier repeatedly since March 2024, compounded by weak onchain metrics and growing competition from rival networks.

Derivatives Data Reflects Trader Caution

The annualized funding rate for Ether perpetual futures dropped to 9% on Thursday, signaling reduced demand for leveraged bullish positions. This contrasts with a 19% funding rate recorded between Friday and Monday, which indicated moderate excitement. Currently, the funding rate has reverted to levels last seen on July 7, when ETH traded near $2,600 — despite a 46% price increase since then.

Declining Network Deposits and TVL

Traders’ disappointment is partly due to an 11% decline in Ethereum network deposits. The total value locked (TVL) in the Ethereum ecosystem fell to a five-month low of 23.4 million ETH on Wednesday, down from 26.4 million ETH thirty days prior. In comparison, Solana's TVL dropped only 4% in SOL terms, while BNB Chain deposits increased by 15% in BNB terms. Ethereum has also lost its top position in decentralized exchange (DEX) volume. Over the past 30 days, Ethereum recorded $81.4 billion in DEX activity, while Solana handled $82.9 billion, and BNB Chain led with $189.2 billion, according to DefiLlama. Network activity is critical because transaction fees fund validators and incentivize decentralized applications (DApps) to build on the platform. Thus, even with Ethereum’s lead in TVL and active developers, stagnant network activity compared to competitors undermines these advantages.

Futures Market Shows Neutral Sentiment

Examining the ETH monthly futures market reveals cautious positioning by whales and market makers. Normally, these contracts trade at a 5% to 10% annualized premium to compensate for longer settlement periods. Currently, the ETH futures annualized premium is 6%, down from 8% earlier in the week, maintaining a neutral range for three weeks. This decline in bullish leverage demand coincides with nearly three consecutive weeks of net inflows into spot Ether exchange-traded funds (ETFs).

Competitive Pressures and Corporate Reserves

The muted enthusiasm around the $3,800 price level may stem from concerns that competitors like Solana and BNB Chain offer more user-friendly experiences due to higher base layer capacity. Additionally, the rise in Ether reserves held by corporations has influenced recent price surges but also raises questions about sustained demand. Nine publicly listed companies have accumulated at least 2,000 ETH each, including Bitmine Immersion Tech (BMNR), SharpLink Gaming (SBET), and The Ether Machine (DYNX), according to Strategicreserve.xyz. If corporate buying continues, ETH could potentially reach $5,000. However, current trader skepticism means the $4,000 milestone remains uncertain.

This article is for general information purposes and is not intended as legal or investment advice. The views expressed are those of the author and do not necessarily reflect the opinions of Cointelegraph.

Source: Originally published at Cointelegraph on Thu, 31 Jul 2025 15:25:29 GMT

Frequently Asked Questions (FAQ)

Market Sentiment and Derivatives

Q: What does the decline in Ethereum's annualized funding rate indicate? A: A drop in the annualized funding rate to 9% suggests reduced demand for leveraged bullish positions in Ether perpetual futures, signaling a more cautious sentiment among traders. Q: How does the current futures market sentiment for ETH compare to previous periods? A: The current neutral sentiment in the ETH futures market, with a 6% annualized premium, is down from previous levels of moderate excitement and indicates cautious positioning by large traders.

Network Activity and Competition

Q: What are the implications of declining network deposits and TVL for Ethereum? A: Declining network deposits and Total Value Locked (TVL) can undermine Ethereum's advantages, as stagnant network activity compared to competitors like Solana and BNB Chain can impact transaction fees and incentives for DApp development. Q: How does Ethereum's DEX volume compare to other networks? A: Ethereum has lost its leading position in decentralized exchange (DEX) volume, with Solana and BNB Chain surpassing it in the past 30 days.

Corporate Holdings and Future Outlook

Q: How might corporate accumulation of ETH affect its price? A: Continued corporate buying of Ether could potentially drive its price higher, with projections suggesting a reach towards $5,000, but current trader skepticism makes the $4,000 milestone uncertain. Q: What factors are contributing to the muted enthusiasm around Ethereum's price consolidation? A: Factors such as competition from rival networks offering more user-friendly experiences and concerns about sustained demand, despite corporate buying, contribute to the muted enthusiasm.

Crypto Market AI's Take

The current market sentiment surrounding Ethereum, as detailed in this article, highlights a crucial interplay between price action and underlying network activity. While Ether has seen a significant price increase, the cautiousness in derivatives markets and declining network metrics suggest that this rally might not be fully supported by organic demand and ecosystem growth. At Crypto Market AI, we leverage advanced AI algorithms to dissect these nuanced market signals. Our AI trading bots and analysts continuously monitor funding rates, on-chain data, and competitive landscape shifts to identify potential opportunities and risks. For traders looking to navigate such periods of uncertainty, understanding these underlying metrics is key. Our platform aims to provide these insights, helping users make more informed decisions by analyzing factors like total value locked (TVL) and decentralized exchange volumes across various blockchains.

Ethereum derivatives show no momentum, raising doubts over K rally