ETH Funding Rates Turn Negative: Market Sentiment Weak, But Shorts Not Yet Dominant

Ethereum's price has been under pressure recently, with investors withdrawing $225 million from spot ETFs. Simultaneously, ETH staking yields have failed to surpass those of stablecoins, leading to a decline in market attractiveness. Despite ongoing upgrades to the Ethereum network and plans to enhance wallet security, these improvements have not effectively stimulated actual demand for native ETH.

The annualized funding rate for ETH perpetual contracts fell into negative territory on Tuesday, indicating increased demand for short positions. Notably, this indicator has remained below the neutral range of 6% to 12% for a month, reflecting weak market confidence. Over the past six months, the ETH price has cumulatively fallen by 54%, and cooling on-chain activity has further exacerbated this trend. Over the past month, the average daily transaction fees on the Ethereum mainnet have averaged $2.3 million, a significant drop from the high of $8 million in early February. While seven-day transaction volume has stabilized at approximately 14 million transactions, the industry's focus has shifted to Layer 2 scaling solutions, failing to bring new incremental demand to ETH.

Unlike the perpetual contract market, the 30-day option risk indicator (put-call skew) for ETH remained in the neutral range of -6% to +6% on Tuesday. Among them, put options are priced at a 7% premium compared to call options, showing that bullish sentiment is slowly recovering. Furthermore, to date, no competing chain has been able to shake Ethereum's leading position with a total locked value (TVL) of $56 billion. The news of US regulatory approval for ETF staking features once triggered market expectations, but when the policy was implemented at the end of 2025, it coincided with the overall crypto market entering a downward cycle - after the total market value rapidly回调 from a peak of nearly $4 trillion, the positive news failed to translate into sustained buying.

The upcoming Ethereum Hegota fork will support users using non-ETH tokens to pay Gas fees and introduce a universal public memory pool, while removing the "public broadcaster" function in privacy platforms such as Railgun and Tornado Cash. Vitalik Buterin also stated that the block generation time and final confirmation time will be gradually shortened in the future to further improve network efficiency. Overall, ETH derivatives and on-chain data both show that the market lacks a strong consensus to break through the $2200 resistance level, but there is no sign that short forces are fully controlling the market. The current market is in a volatile consolidation phase in a sentiment trough.